Nucor Marketing
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Nucor Corporation
Table of Contents
Chapter 1
Executive Summary
Page 3
Chapter 2
Market Focus
Page 4
Chapter 3
Human Resource Focus
Page 7
Chapter 4
Management of the Market Mix
Page 10
Chapter 5
Business Results
Page 13
Appendix
Page 16
References
Page 19
Executive Summary
Nucor Corporation has been ranked by Business Week as number one in their list of top fifty performers of 2005. How is it possible that the largest U.S. steel manufacturers and largest recycler in the United States, to outrank the likes of Dell, Yahoo! and Conoco Phillips, to soar to the head of the pack?
Nucor has origins in the auto manufacturing industry, and entered the steel business with the acquisition of the Vulcraft plant in South Carolina in 1962. In 1988, Nucor transformed the American market by adapting German technology, and introduced the first flat-rolled mini-mill in the United States. This innovation made Nucor the envy of the steel industry, and established their value discipline as a market innovator through product leadership. Since that time, Nucor has maintained their product leadership by venturing into a variety of products such as cold finished steel and steel fasteners. The future of the steel industry, as far as Nucor is concerned, looks to be headed for strip casting, which will once again set the bar high, and put steel industry on alert that Nucor intends to stay on top.
The New Model for Consumer Relevancy indicates that the Hierarchy of Interaction should have a company dominate on one attribute, differentiate on one attribute and be on par on three attributes. In the case of Nucor, they most definitely dominate on their products. They differentiate on access, by locating their mills close to their customers, and are on par on price, service and experience.
When you apply the principles of the four primary management practices from “What Really Works” by Nohria, Joyce and Roberson, you find that Nucor fits in with their model. Nucors strategy is a four pronged approach that includes: optimize existing operations, continue greenfield growth, pursue strategic acquisitions, and grow globally through joint ventures leveraging new technologies. Their use of execution is by delegating responsibility to all levels of employees. The culture at Nucor is to promote from within, they have a flattened organizational chart, and variable compensation based on firms profit performance. The structure of Nucor is to maintain and create geographic proximity to their customers. The first secondary management practice that Nucor utilizes is innovations such as; mini-mills strip casting, and building blast furnaces. The other secondary management practice utilized is mergers and acquisitions. Daniel DiMicco, unlike previous CEOs of Nucor decided that pursuing acquisitions would play a key part in their continued success. Acquisitions include more than one billion dollars in steel plants.
Customer and Market Focus
Nucor has the distinction of being the United States largest producer of steel and steel products. What may be more surprising is that Nucor is also our nations single largest recycler-recycling 17 million tons of scrap steel in 2004. Because of Nucors role as both producer and recycler, the company really has two sets of customers. One is their customers of new steel and steel products. The other set of customers include their sources of scrap steel, which is the building block of the forging process.
Nucors recycling customers really dont require service; after all, most of them are happy they sell their scrap steel for a reasonable price. By providing a good outlet for scrap steel, Nucor is providing service to the manufacturing, steel processing, machining, and salvage industries. Moreover, Nucor is using fewer raw materials by including recycled steel in their forging process. Since Nucor is indeed providing a service to sellers of scrap steel, this group certainly should be included among Nucors customer base.
The more obvious group of customers are the consumers of new steel and steel products that Nucor produces at plants in sixteen states around the U.S. Nucor focuses on producing steel close to the market in which it will be used. This offers customers access to Nucors products without exorbitant shipping costs. Their plants are quite diverse in terms of the steel products that they produce and therefore their customer base is equally diverse. Figures 1-2 and 1-3 in the appendix show Nucors product mix, and end use markets.
Nucor built their company on the idea of producing steel more efficiently and more economically than other steel makers, but in order to better serve their customers, their product line has expanded. Instead of their products all being sold by the ton, now products like steel construction studs are sold with much higher margins. Value added products are much more profitable for Nucor and also offer greater utilities to the customers. Nucors profitability has been based on providing customers a service by purchasing unwanted scrap steel, and also offering a wide variety of high quality steel products that provide outstanding utility to the customer. Can you imagine providing service and utility on both ends; what a concept.
Part of keeping the customer satisfied involves producing exactly what that customer needs. In order to insure that they can do this, Nucor has a diverse group of steel mills. Nucor has nine bar mills that produce steel bars and angle iron for the automotive, construction, farm machinery, metal buildings, furniture and recreational equipment industries. These plants are scattered across the entire United States.
Sheet steel is used by the automotive industry as well as for appliances, pipe and tubing. Nucor has four sheet mills in Indiana, Arkansas, South Carolina and Alabama. Nucor also has two plants that make extra thick sheet steel called “plate.” This steel is used mainly by manufacturers of heavy equipment, rail cars, ships, barges, refining vessels, and high pressure tanks.
The last of Nucors structural steel plants produce beams mainly used for building construction, heavy structural steel products, and pilings. Bar, sheet, plate and beams comprise the vast