Nucor

Nucor Corporation
Public company
Traded as NYSE: NUE
S&P 500 Component
Industry Steel
Founded 1940
Headquarters Charlotte, North Carolina, United States
Key people
 John James Ferriola, Executive Chairman, CEO & President [1]
Products steel, rebar
Revenue Decrease US$16.4394 billion (2015)[2]
Decrease US$357.6 million (2015)[2]
Total assets Decrease US$14.25 billion (2015)[2]
Total equity Decrease US$7.416 billion (2015)[2]
Number of employees
 23,700 (2015)[1]
Website www.nucor.com

Nucor Corporation is an American producer of steel and related products. It currently ranks as the largest steel producer in the United States of America and is the largest "mini-mill" steelmaker (i.e. it uses electric arc furnaces to melt scrap steel as opposed to blast furnaces to melt iron). Nucor is North America's largest recycler of any material and recycled 16.9 million tons of scrap in 2015.[1] It is headquartered in Charlotte, North Carolina, United States.

Current operations

In 2015, the company produced and sold over 25 million tons of steel. Nucor operates 23 scrap-based steel production mills.[1]

Nucor produces steel bars (carbon and alloy steel), beams, sheet / flat rolled steel, plate, steel joists, joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, steel fasteners, metal building systems, light gauge steel framing, steel grating, expanded metal, and wire and wire mesh. In addition, through its David J. Joseph Company subsidiary, Nucor also brokers ferrous and nonferrous metals, pig iron and HRI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap.

History

Nucor's history consists of distinct eras: the Reo Motor Car era, the Nuclear Corporation of America era, the Iverson years (1967–98), the DiMicco era (2000-2012), and the Ferriola era (2013–present).[3][4]

The Reo Motor Car Era

Nucor's origins are with auto manufacturer Ransom E. Olds, who founded Olds Motor Vehicle Company in 1897 (later, as Oldsmobile, to become a part of General Motors Corporation). In 1905, Olds left Oldsmobile and established a new company, REO Motor Car Company, in Lansing, Michigan. Though Olds' products, including the luxurious REO Flying Cloud car and REO Speed Wagon truck, were popular, they were not profitable, and the company filed for bankruptcy protection in 1938.[5]

After the bankruptcy reorganization, REO exited the car business to concentrate on trucks but continued to suffer losses. In December 1954, REO sold its entire manufacturing operations to Bohn Aluminum and Brass Corporation.[5]

The Nuclear Corporation Era

The company initiated liquidation proceedings after the sale of its operations, but a group of dissident activist shareholders, noticing the existence of a usable tax loss, successfully challenged the liquidation in a proxy fight in September 1955, and forced REO to take over a tiny nuclear services company called Nuclear Consultants, Inc. in a reverse takeover. The company was renamed "Nuclear Corporation of America Inc.", and relocated to offices in the Empire State Building in New York City. Nuclear's attempt to recast itself as a nuclear industry services company was unsuccessful, and it followed the example of other companies in the 1950s and 60s and attempted to become a conglomerate, moving its headquarters to Phoenix, Arizona. It made several acquisitions, including Vulcraft Corporation, a steel joist manufacturer located in Florence, South Carolina. Vulcraft had been founded by Sanborn Chase (no relation to Chase & Sanborn Coffee), who died at an early age, leaving the company to his widow. Nuclear purchased Vulcraft from Chase's widow in 1962 and hired F. Kenneth Iverson as general manager. The conglomerate fared no better than its predecessors and in March 1965 filed for bankruptcy. The Board of Directors fired Nuclear's President (and had to return his private jet to him), but could not find a replacement. Eventually Samuel Siegel, an accountant with Nuclear and friend of Iverson, who had been looking to leave the company, informed the Board that he would remain with the company under two conditions: Iverson would become President and he (Siegel) would become Chief Financial Officer, conditions the Board accepted.[6]

The Nucor Era

Iverson and Siegel reorganized Nucor around its only profitable business, steel fabricator Vulcraft, and all other businesses were either sold or liquidated. The company moved its headquarters to Charlotte, North Carolina, in 1966, to be closer to its main Vulcraft plant.[6]

Unable to get favorable steel prices from American manufacturers and unhappy with the imported steel available at the time, Iverson (a metallurgist by training) decided to extend Nuclear vertically into steelmaking by building its first steel bar mill in Darlington, South Carolina, in 1968. The company chose to purchase an electric arc furnace, which was far cheaper than the traditional steel blast furnace, with a US $6,000,000 loan secured by all of the company's assets. Production delays and staffing problems caused the stock to drop to pennies but earnings soared in 1971 and 1972.[6]

In 1972 the company, recognizing that the company was misnamed, adopted its current name. Since that time, Nucor has expanded into other steel products, gained some control of its raw material supply, became a leader in recycling technology, and expanded its market presence.

In 1988, Nucor became the first minimill to manufacture wide flange beams with a depth of 40". The company opened its building products division that same year. In 1989, Nucor opened a facility in Crawfordsville, Indiana, which was the first mini mill to produce flat rolled steel using thin-slab technology.[7]

DiMicco Era

In September 2000, Dan DiMicco, formerly the general manager of the company's highly profitable Nucor-Yamato Steel joint venture, was appointed CEO. In the years that followed, the company made several acquisitions.

In 2001, the company acquired Auburn Steel, its first acquisition in 36 years.[8] In 2002, Nucor bought Birmingham Steel, including the Mississippi Steel plant and Birmingham, Alabama, operations.[9]

In 2004, Nucor purchased Corus Tuscaloosa [10] and in 2005, Nucor purchased Fort Howard Steel [11] and Marion Steel.[12]

In 2006, Nucor purchased Connecticut Steel,[13] Verco Decking,[14] and Harris Steel.[15] The $1.07 billion acquisition of Harris Steel expanded Nucor into production of rebar, a strong market due to increased spending on infrastructure.

In 2007, the company's Nucor Building Systems division acquired Magnatrax, which bolstered its share of the pre-engineered metal building systems market.[16]

In March 2008, in order to take more control of its raw material supply and prices, Nucor purchased the David J. Joseph Company, one of the largest scrap brokers and recycling companies in the United States.[17]

In 2012, Nucor purchased Skyline Steel.[18]

Ferriola Era

Effective January 1, 2013, John J. Ferriola was named as Chief Executive Officer of Nucor and Daniel R. DiMicco was named Executive Chairman.[19]

In 2014, the company purchased Gallatin Steel Company.[20] In 2015, the company acquired additional rebar facilities in Marion, Ohio and Georgia.[21]

Nucor's divisions

Nucor consists of many subsidiary businesses that operate independently, some of these companies include:

The Nucor Culture

Nucor attributes its success to decentralized management philosophy, performance based compensation, egalitarian benefits, customer service and quality, and technological leadership. None of Nucor's plants, whether built from scratch or acquired, are unionized, and Nucor is opposed to unions, believing them to be a destructive force in the US steel industry. No Nucor plant has ever held a successful union certification election, even though Nucor management has not engaged in the controversial "union busting" tactics adopted by some companies, and has never laid off an employee due to a work shortage.

Decentralized Management Philosophy

Nucor is highly decentralized in its operations, there are only five managerial levels at Nucor (supervisor/professional, department manager, division general manager, executive vice president, and President/CEO). Most operating decisions are made at the division level or lower. In addition, Nucor claims that its corporate office staff numbers around 75 employees, which may be the smallest number of corporate office employees among major corporations.

Performance Based Compensation

All Nucor employees, from senior officers to hourly employees, are covered under one of four basic compensation plans (in addition to base pay) which reward employees for meeting certain incentive specific goals and targets:

In addition, Nucor has periodically issued an extraordinary bonus to all employees, except officers, in years of particularly strong company performance. This bonus has been as high as $2000 for each employee.

Egalitarian Benefits

Nucor's senior officers are not provided traditional "perks" such as company cars, executive parking spaces, or executive dining rooms, though in August 2006, the company did purchase a corporate jet for use by senior management. Several programs (such as Nucor's Profit Sharing, Scholarship Program, employee stock purchase plan, Extraordinary Bonus, and Service Awards Program) are not available to Nucor's officers but only to lower-level employees. Each annual report since 1975 has listed the names of every employee; in the 2007 annual report, it took 12 pages to list the names of all 18,000 employees.

Technological Leadership

Nucor was among the first steel companies in the United States to use electric arc furnaces to melt recycled steel (primarily from junked automobiles). In 2007, Nucor recycled nearly 10 million cars in its production processes, the equivalent of one SUV every four seconds.

Currently, Nucor (in conjunction with two foreign-owned steel companies) operates a facility in Crawfordsville, Indiana that continuously casts sheet steel directly from molten steel without the need for heavy, expensive, and energy-consuming rollers. The process (known as Castrip[22]), if successful, would allow an entire mill to be built in 1/6 the space of a 'mini-mill' and at 1/10 the cost of a traditional integrated mill. They call this concept a 'micro-mill'.

Nucor has two pilot projects, one in Western Australia and one in Brazil, which are developing low-cost sources of iron for use in its mills.[23]

Controversies

Environmental record

Nucor is a member of the U.S. Green Building Council and has participated in other elite environmental programs, such as the Environmental Protection Agency’s National Environmental Performance Track program.

Nucor has also sponsored construction of a regional butterfly aviary, launched a waterfowl protection project and helped preserve wetlands. Several divisions have environmental management systems that conform to ISO 14001 standards.

In 2000, Nucor settled with the U.S. Justice Department and the United States Environmental Protection Agency to resolve allegations that it had not adequately controlled the emission of toxic chemicals into the air, water, and soil of Alabama, Arkansas, Indiana, Nebraska, South Carolina, Texas, and Utah. The $98 million result was "the largest and most comprehensive environmental settlement ever with a steel manufacturer."[24]

In 2002, The University of Massachusetts Amherst's Political Economy Research Institute ranked Nucor as the 14th largest corporate contributor to U.S. air pollution, due to the release of 760,000 pounds of toxins into the air yearly.[25] However, by 2013, the same report ranked Nucor as the 69th largest corporate contributor to U.S. air pollution due to the release of 260,000 pounds of toxins into the air yearly.[26]

Nucor is considered to be the largest steel recycler in the U.S. “We have always been green,” explains Director of Group Sales Burt Shell. “NBS buildings average over 80 percent recycled content.” Projects fit with the industry trend of implementing green initiatives.[27]

See also

References

  1. 1 2 3 4 Nucor Corporation 2015 Form 10-K Annual Report
  2. 1 2 3 4 "Nucor Reports Results for Fourth Quarter and Year Ended 2015". PRNewswire. January 28, 2016.
  3. ↑ Preston, Richard (1992). American Steel. Quill. ISBN 0-380-71822-7. Construction and startup story of Nucor's first big mill, discusses the history of Nucor.
  4. ↑ "History of Nucor". Steelonthenet.com.
  5. 1 2 "REO Motor Company Records". Michigan State University Archives and Historical Collections.
  6. 1 2 3 "Nucor Corporation". Company-Histories.com.
  7. ↑ [url=http://www.nucor.com/story/chapter2/ Nucor History: Chapter 2]
  8. ↑ "Nucor Acquires Auburn Steel Assets". Nucor Corporation. March 19, 2001.
  9. ↑ "Nucor Acquires Birmingham Steel Assets". PRNewswire. December 9, 2002.
  10. ↑ "Nucor to Purchase Assets of Corus Tuscaloosa". Nucor Corporation. June 8, 2004.
  11. ↑ "Nucor to Purchase Oak Creek, Wisconsin Assets of Fort Howard Steel". PRNewswire. January 10, 2005.
  12. ↑ "Nucor To Purchase Assets of Marion Steel". Nucor Corporation. April 18, 2005.
  13. ↑ "Nucor Acquires Assets of Connecticut Steel". Nucor Corporation. May 1, 2006.
  14. ↑ "Nucor Acquires Assets of Verco Manufacturing Company". Nucor Corporation. November 1, 2006.
  15. ↑ "Nucor Acquires Over 96% of Harris Steel Group Inc. Shares". PRNewswire. March 2, 2006.
  16. ↑ "Nucor Acquires Magnatrax". PRNewswire. August 27, 2007.
  17. ↑ "Nucor Acquires The David J. Joseph Company". PRNewswire. March 3, 2008.
  18. ↑ "Nucor Acquires Skyline Steel LLC". PRNewswire. June 21, 2012.
  19. ↑ "John J. Ferriola To Be Named Nucor CEO Effective January 1, 2013, Daniel R. DiMicco Continues As Executive Chairman". November 16, 2012.
  20. ↑ "Nucor Completes Acquisition Of Gallatin Steel Company". PRNewswire. October 8, 2014.
  21. ↑ "Nucor to Acquire Cold Finish Bar Assets in Ohio and Georgia". Nucor Corporation. November 9, 2015.
  22. ↑ http://www.castrip.com Castrip
  23. ↑ "NUCOR: A Shareholder-Friendly Low-Cost Steel Producer". Guru Focus. September 26, 2011.
  24. ↑ "U.S. REACHES ENVIRONMENTAL SETTLEMENT WITH STEEL MANUFACTURER NUCOR". Environmental Protection Agency. December 19, 2000.
  25. ↑ "Greenhouse 100 Polluters". Political Economy Research Institute. Retrieved 2016-02-27.
  26. ↑ "Greenhouse 100 Polluters". Political Economy Research Institute. May 2013.
  27. ↑ Nucor Building Systems Credentials

External links

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