Nucor at a Crossroads

Group- 2, Section- B

Name Roll No

Bipradip Chatterjee 2021PGP088

Himanshi Gupta 2021PGP146

Abhay Singh 2018IPM001

Swapnil Arun 2021PGP401

Somya Gupta 2021PGP391

General Overview:
● Nucor Corporation founded by has been a successful steel maker in the U.S for
almost 35 years. It has a market share of almost 21 million.
● Nucor is considering commercialization of thin slab technology developed by
SMS that can reduce the production cost of flat iron sheets by 50%.
● Traditional integrated mills cast steel slabs to a thickness of 8-12 inches. But CSP
developed by SMS allowed slabs to be cast as small as 2 inches thick.
● Building economical Steel Plants, Efficient operations, Flat hierarchy in the
organization, regular monitoring from head office and incentive driven employees
were the reason of Nucor’s past success.
● At Nucor, Managers of plants were given autonomy which led to smooth and fast
decision making. Continuous innovation, usage of modern equipments and
customer centric approach has given competitive advantage to Nucor.
US Steel market:
● Domestic Consumption in 1986: 90 million tons
● Capacity of Integrated Steel makers: 107 million tons
● Capacity of Minimills: 21 million tons
● Capacity of Specialty steel makers: 5 million tons
● Types of products: Semifinished products, Sheets, Bars, Wires, Other shapes
● Types of Shipments based on customer groups: service centers and distributors, the
automotive sector, construction, and the appliance and equipment industries.
● Service centers, Automotive sector and the Appliance and equipment industries
together accounted for half of total domestic shipments and three-quarters of the
shipments of flat sheet.
● The three most important buyer purchasing criterias were- .Price, quality and
dependability
Nucor Operations

● Nucor located its diverse facilities in rural areas across the United States.
● Flat organisational structure with only 5 layers which resulted in faster communication and rapid
decision making. There is also decentralisation at the plant level.
● It established strong ties to its local communities and its workforce
● Nucor selected operations in states its tax structures that encouraged business growth
● Nucor’s top management favoured the company’s commitment to remaining union free and
instead motivate the workers through incentives
● Nucor and its subsidiaries consisted of nine businesses, with 25 plants
Nucor’s Business Strategy

Market Price-
Low Cost

Plant
Efficiency
Employee
Low Cost Satisfaction
Producer

Advanced
Technology
Cut costs-even
for higher
management
 Swot Analysis for Nucor
Strengths Opportunities
1) Leading market position in USA 1) Strategic acquisitions and
2) Diversified and balanced product expansions
mix 2) Robust growth perspectives in the
3) Robust production network US steel market

Weakness
Threats
1) Dependence on outside vendors for
1) Tough Competition
raw materials
2) Greenhouse gas regulation in place
2) Competition with imports
 Benefits and Cons of CSP plant

Benefits
Cons
● Cost reduction
● Expensive
● Increase in efficiency
● Difficulty in operating
● Get a discount of $10-$20 million on immediate
● It is still not commercially tested and one of many
purchase
● competing technologies
Nucor will gain maximum share of low end flat
● New technologies can emerge and leapfrog it
sheet business
Recommendations for Nucor

1) To mitigate foreign competition cost advantage

2) Thwart supplier power through vertical integration and acquisition of raw material suppliers
3) Invest in Product mix diversification
4) Also the future of Nucor lies in the flat products which will provide Nucor a competitive
advantage in flat rolled products as more than 50% of the market is from flat products
5) They should employ thin slab casting technology along with the technology being currently used
by integrated steel mills, and also a smaller size of plants will be adequate for achieving
economies of scale.