Nucor Corporation 1995: after 30 years of success, what next? The Nucor story is about how a nearly bankrupt enterprise became the most productive and profitable company in the U.S. steel industry. It is also a story of how the two top managers of Nucor Corporation set a standard of personal and corporate behavior that continues to inspire social and economic civility within and beyond U.S. borders.
The change in fortunes for the company began in the summer of 1965, when the new Chairman of the Board, Donald Lillis, asked the financial manager Sam Siegel to stay on rather than quit. Siegel responded with two conditions: appoint Ken Iverson president and himself, Sam Siegel, treasurer and secretary. The Board agreed, and the new top management team of Iverson and Siegel came into being. They believed that customers ought to receive good value and productive employees ought to be rewarded, and they saw to it that this happened. By 1974, just nine years from almost certain bankruptcy, the two top managers sensed the company would become “unstoppable”. However, it would be another 20 years before Nucor was recognized as a “great” company with amazing returns (Collins 2001). For example, between 1965 and 1995 Nucor returned 3 times more on invested capital than General Electric under “super manager” Jack Welch (Appendix 1, p.27 summarizes Nucor’s financial position in 1965 and 1995).
According to Samuel Siegel, the greatest difference between 1965 and 1995 was not in the financial figures but, rather, in the recommendation for top manager. In 1965, Sam Siegel had no doubt about his recommendation to Donald Lillis, Chairman of the Board, that Ken Iverson be appointed top manager. Sadly, in 1995 he had no such confidence about the person who most likely would be recommended as Ken Iverson’s successor. As a member of the Board, Siegel was obligated to offer his opinion. What would he say?
* This case study on the Nucor Corporation was written with the valuable assistance of Samuel Siegel, retired vice-chairman, chief financial officer, treasurer and secretary, Nucor Corporation for purposes of research, theory development and classroom discussion. It was written by Bryan Poulin, associate professor in strategy and ethical leadership, Faculty of Business Administration, Lakehead University, Ontario, Canada. Thanks go to people interviewed, and who reviewed earlier versions, namely: James M. Coblin, vice-president of human resources, Nucor Corporation; Ted Kelly, retired lead man, Darlington, South Carolina rolling mill shop, Nucor Corporation, and his wife, Alice Kelly, homemaker; Betsy Liberman, secretary-receptionist, Nucor Corporation; and Samuel Siegel, retired vice-chairman and chief financial officer, Nucor Corporation. Finally thanks go to Robert Willis for his early review and suggestions, to Arlene Smith and Lauree Poulin for the many days spent drafting and redrafting the manuscript, and to students at Lakehead University who first tested this Nucor case (latest revision September 2008, 210).
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The story of Nucor can be traced to 1891 when Ransom E. Olds was awarded a patent for his steam engine. In 1893 Olds was first to export a U.S. made automobile, his steam-powered Oldsmobile, to a London firm. In 1904 the company he founded, Olds Motors Works, had become the largest automobile manufacturer in the U.S. This was the same year that R. E. Olds sold his shares in Olds Motor Works and he began manufacturing cars with the Reo (from his initials) Motor Car Company. The Oldsmobile brand was later sold to General Motors in 1908.
R.E. Olds filed for bankruptcy in 1938, near the end of the Great Depression, and the Reo Motor Car Company was reorganized under Reo Motors to manufacture light trucks named “Reo Speedwagons”. Demand for light trucks was driven by U.S defense contracts, first during World War II and again during the Korean...
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