Business in Nucor Essay -- essays research papers

Nucor Corporation - Structuring for Efficiency and Effectiveness Introduction Nucor achieved its position as one of the largest steel producers in the United States by carefully monitoring costs and paying attention to the needs of its markets. This strategy of providing its customers with a competitive product at competitive prices has brought success and growth to Nucor, in sales, income, and stock price. Recently, however, the control of the organization has been brought into question. The recent announcement of a joint venture between Nucor and U.S. Steel to develop, test, and bring on line a new method for turning iron ore into steel added to the concern over the ability of company management to maintain the entrepreneurial spirit for which the company is famous. Background Nucor is the second largest steel producer (2nd in assets, 1st in profits) in the United States. Its profits of $123 million have made it one of the most efficient firms in the steel industry. Nucor achieved that position by focusing on the manufacturing segment known as mini-mills - the relatively small, electrically-powered mills that melt down scrap steel to manufacture products. This process saves on costly labor, raw materials, and the capital-intensive machinery necessary to produce steel from iron ore. A major concern of mini-mill steel manufacturers is maintaining quality, since their raw material consists of scrap steel of varying quality, containing a variety of alloys and impurities. Another concern it the recent rising price of scrap steel. Nucor started out by manufacturing steel for the beams and posts produced in company-owned structural steel manufacturing plants and then expanded by selling its low-cost steel to other firms. Outside customers gradually became the primary outlet for sales by the mini-mills. Nucor was able to expand sales from the mini-mills by keeping costs below its competitors, both in the United States and abroad. Nucor has consistently sought ways to lower costs while broadening markets. During the latter part of the 1980s, much of the company's efforts were placed on developing technology for manufacturing sheet - flat-rolled steel of the type used by automotive and appliance manufacturers - which had traditionally been the sole domain of the big steel companies and foreign competitors. Ken Iverson, former CEO of Nucor, risked several hundr... ...at the joint venture with U.S. Steel would hinder the quick decision making typical at Nucor. Iverson had gambled by committing to the first phase of the new process on his own, without first testing the process in a pilot plant on a small scale. The next stage was to complete the new process with a plant in the United States, relying on the high level of research and development skills at U.S. Steel and the ability of Nucor to pioneer new methods. Analysts wondered whether Nucor could coexist with U.S. Steel, with its large, hierarchical structure and strong union. This challenge was especially important since the new venture was felt to be the focal point for the continued growth of Nucor. In the late 1990s, Iverson was fired by the Board of Directors of Nucor. His successor, John Correnti, who along with Iverson were the two major proponents of the mini-mill concept, was ushered out soon afterwards. Daniel R. DiMicco is the new President and CEO, but with years of experience at Nucor, the vision may or may not change. Will the new management attempt to rein in the general managers of the various operating entities of Nucor - a situation neither Iverson nor Correnti supported?