NUCOR: AMERICA’S STEEL (RE)MAKER

Team Members: Hannah Williams, Sara McKeever, Ondrea Null,

Mark Hast and Brady Inners

http://www.nucormotivation.weebly.com

History

• 1905-Ransom E. Olds forms REO Motor Company• 1955-REO Motor Company merges with Nuclear Consultants,

Inc. and forms Nuclear Corporation Of America• Most important decision for the company occurred in 1965!

• 1965-Ken Iverson becomes president of Nuclear Corporation of America

• 1969-First mini mill in Darlington, South Carolina• 1971-Focus narrowed to just steel production. Name

changed from Nuclear Corporation of America to Nucor

• 1974-Enacts foundation to provide higher education to teammates’ children

History

What move saved Nuclear Corporation Of America from bankruptcy? When did this occur?

Question One!

Ken Iverson becoming president of Nuclear Corporation Of America in 1965 saves the company

from bankruptcy!

Answer One!

Ken Iverson• Became president when company barely staving off

bankruptcy• Sold off under-performing divisions of company;

focused on steel production• Low cost of production, state-of-the-art production

process, and high worker efficiency set Nucor apart• Nucor became an innovator in steel production as well

as a Fortune 500 company

Background

“70% culture and 30% technology. The truth is, I’m not sure if it’s 80 to 20 or 60 to 40 percent, but I’m certain our culture accounts from more than half our success as a business.”

– F. Kenneth Iverson

• 1995-Ken Iverson steps down as president and becomes chairman of the board of directors

• 2000-Dan DiMicco is named new president and CEO• 2002-Developed world’s first micro mill in Crawfordsville, • 2011-Breaks ground on

state-of-the-art facility that converts natural gas and iron ore pellets into iron in St. James Parish, Louisiana

• Indiana.

History

What three factors set Nucor apart from other Steel industries during the time of Ken Iverson?

A. Low Cost of Production, High Worker Efficiency, and Low PricesB. Low Cost of Production, State-of-the-Art Production Process, and High Worker EfficiencyC. High Worker Efficiency, Low Prices, and State-of-the-Art Production Process

Question Two!

B. Low Cost of Production, State-of-the-Art Production Process, and High Worker Efficiency

Answer Two!

Dan DiMicco• Grew Nucor into a world-wide leader with over 20,000

teammates at 212 facilities• Expended during times of recession; bought

competitors assets for fraction of their initial costs• Numerous incentive programs to keep labor costs low;

production and motivation high (MOTIVATORS!)– Each employee has a voice in manufacturing process– No gap between employees and high ranking officials

Background

What occurs when an individual has positive internal feelings that are generated by doing well, rather than feeling dependent on external factors?

Question Three!

Intrinsic Motivation!

Answer Three!

Question Four!

What does the term FOCUS stand for?

Answer Four!

F – Steel that FITSO – ON Time DeliveriesC – COMPETITIVE PricingU – UNBEATABLE ServiceS – SOLUTIONS that Work

Present Day• 2013 – Dan DiMicco steps down and becomes

Executive Chairman, promising toremain an active voice for tradeand manufacturing policy

• 2013-John J. Ferriola named newpresident and CEO

• World’s 4th largest steel producer bymarket capitalization

Continuous Growth

• “Nucor was founded on some pretty basic principles: that steel could be produced in a more efficient, and environmentally friendly way. That our employees, neighbors and shareholders should always be treated fairly, honestly, and respectfully. That our decisions should be based on securing long-term survival, not a short-term gain. That management should always be accessible and accountable. And that everyone in our company should conduct themselves according to the highest ethical standards. “

Continuous Growth

• Buys land around their new developments Easy ability to expand!

• 2006 – Acquisition of Harris Steel Group entry into the rebar fabrication market, and significantly advances Nucor’s downstream growth initiatives (Horizontal growth)

• 2008- Acquisition of The David J. Joseph Company one of the nation’s largest scrap processors and brokers. –Gives further control of its primary feedstock – scrap steel. (Vertical growth)

• 2012- enters into a long-term agreement with Encana Oil and Gas (USA) Inc. ensure a reliable, low cost supply of natural gas for more than 20 years

Question Five!

Name one way Nucor prepares for the future/maintains their low-cost strategies

Answer Five!

Buying land around developmentsHorizontal growth Harris Steel Group

Vertical growth The David J. Joseph CompanyLow-cost supply of natural gas for more than 20 years

Encana Oil and Gas (USA) Inc.

Low-Cost Leadership Strategy

INDIVISIBLE

Five Competitive Forces

• Rivalry Among Steel Producers• Competition from Substitutes• Threat of Entry• Bargaining Power of Suppliers– Chinese companies purchasing US scrap metal

• Bargaining Power of Customers

Question Six!

Name TWO of the FIVE competitive forcesof the steel industry.

Answer Six!

Rivalry Among Steel ProducersCompetition from Substitutes

Threat of EntryBargaining Power of Suppliers

Bargaining Power of Customers

Low-Cost Leadership Strategy

• Continuously adopting cost-saving ideas and production efficiency

• Using incentive compensation for production workers

• Charges low prices and win orders over competitors to keep Nucor plants running at full

• “Plays offense” to build sales and grow in business

Incentive Compensation System

• Incentive plan not only encourages employees to perform well at individual level and team level– Production Incentive Plans– Department Manager Incentive Plan– Professional and Clerical Bonus Pay– Senior Officers Incentive Plan

• Well developed benefit plan ranging from 401(k) and profit sharing to medical and dental places

• Scholarships for children of employees

HR Practices and Policies

• No lay-off policy and empowerment of employees• Practices well-matched to low-cost provider

strategy• Strong reliance on production incentives• Encourage employees to better themselves through

study

Question Seven!

Name TWO of the FOUR incentive plans put into play by Nucor as part of their low-cost leadership strategy

Answer Seven!

Production Incentive PlansDepartment Manager Incentive PlanProfessional and Clerical Bonus Pay

Senior Officers Incentive Plan

Low-Cost Leadership Strategy

• Pay For Performance• Lower hourly wages,

great rewards program• High motivation due to

equal treatment for all

• Operating decisions made at division level

• 4 management layers between CEO’s and employees

• Corporate office staff of only 75 people

Cost-Conscious Operating Lean Corporate Staff

Aspects of Strong Leadership

• Senior officers not provided with traditional benefits• Annual reports show names of all employees• Low costs profitable every quarter since 1966• Few corporate perks

Culture and Responsibility

• Achieve the goals put upon them

• Understand the rewards• Be a participative

member of the company• Provide feedback

Employees must: Effective operating style

• Safety first• Eliminating hierarchy• Trust and freedom• Inspiring work ethic• All workers have a

stake in the company

“To keep a cooperative and productive workforce you need, number one, to be completely honest about everything;

number two, to allow each employee as much as possible to make decisions about that employee’s work , to find easier and more productive ways to perform duties; and number three, to be as fair as possible to all employees. Most of the changes we make in the work procedures and in equipment come from the employees. They really know the problems of their jobs better than anyone else.” – Dave Aycock

Final Question!

What buzzword from the presentation best describes why Nucor is so successful today?

Answer!

Pay for Performance!

Thank You!