Nucor Case Study
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Background
Nucor has changed its business focus several times over the years. During World War II they focused on nuclear technology developments as Nuclear Consultants. After the Korean War in 1955 they became a conglomerate as The Nuclear Corporation of America. When the nuclear business did not deliver profits, they shifted gears towards building “hi-tech” equipment. Big changes came in 1962, when they purchased Vulcraft and hired Ken Iverson. The Nuclear Corporation of America purchased Vulcraft on the condition that Ken Iverson would run it. Over the next four years Vulcraft flourished under the leadership of Ken Iverson and the equipment manufacturing business did not. This paved the way for the name change to “Nucor”, as they went through their fourth reorganization and named Ken Iverson CEO to lead the way into the steel business in 1966. With Ken Iverson at the helm of Nucor, the company prospered in profitability almost continuously for the next 33 years. In the most recent times they have faced the threat of foreign competition that has put Nucor at the crossroads of survival.
Corporate Strategy
Early on in their existence, Nucor management gained success on having a lean management structure and remained very focused on diversification over the years. The breadth of the management structure has been broadened due to the changing environment and conditions in their business and the steel industry. Nucors current corporate strategy is to focus on “mini-mill” manufacturing that has proven to be very successful over the last three decades. Nucors “mini-mill” production method allows them to open and operate specialized manufacturing facilities in areas where they can attract good labor to that can operate the mill on an independent P & L, bringing the finished goods closer to the end user. They also rely heavily on industry innovations that have made steel production more optimized and environmentally cleaner. Their internal focus is on keeping their team members happy and producing ahead of production quotas. They started in the industry a joist fabricator, and have diversified their product line and vertically integrated to produce their own raw materials and prepare steel at lower costs. This has allowed them to compete across multiple steel business sectors.
Industry Environment
Recently the global market has posed several challenges for Nucor and driven changes internally to allow them to remain competitive. Market consolidation has been a contributor to lower sale cost of steel. Foreign steel production has also played a significant role with the US market. The world giant producer China is saturating the US market with an over-supply of their cheaply produced steel at prices near US manufacturing cost. The US steel industry has been led by US Steel