Indra WahyunigsihMartha Tri LestariMuhamad MuslihRahmat Hidayat

NUCOR CORPORATION: COMPETING AGAINST

LOW-COST STEEL IMPORT

Ratih HendayaniRennyta YusianaRetno SetyoriniSri Widaningsih

Founded in 1904 – by Ransom Eli Olds

Started as a motor car manufacturer under the name “REO”

Changes its name to Nuclear Corporation of America Inc. after selling its car business to Bohl Alluminium & Brass company and subsequently buying a nuclear services company.

The Company then transformed itself into a conglomerate acquiring semiconductor, steel joists (Vulcraft Corporation), air Conditioning ducts etc. units

Then ultimately becoming NUCOR – largest operator of mini mills

NUCOR CORPORATION

A firm's overall financial health over a period of time, to be used to compare similar firms across the same industry

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Nucor net earnings to net sales % Return on average equity %

Mittal Steel net earnings to net sales US Steel net earnings to net sales

AK Steel net earnings to net sales ROA

PRODUCT LINENucor’s first venture into steel in the late 1960’s via Vulcraft division

• Vilcraft’s Joist, glirder and decking products were usedmainly for roof and floor support system in retails stores, shopping centre, warehouse manufacturing facilities, schools, churchs, hospitals and to a lesser extent, mutistory buildings and apartments.

• In 1979 Nocur began fabricating cold finished steel products.• Steel bars have various shapes, rounds, hexagon, flats,

channels and squares and were made of carbon and leaded steels.

• Cold finished steels used in tens of thousand of products, including anchor bolts, farm machinery, ceiling fan motors, garage doors openers, air conditioner compressor, and lawn mowers.

• Nucor sold cold finished steel directly to large customers in the automotive, farm machinery, hydraulic, apliance, and electric motor industries and to independent steels distributors.

PRODUCT LINESteel Making In 2006 Nucor had four bar mills making carbon and alloy

steels in bars, and Nucor had 10 such plants with a total annual capacity of approximately 7.7 million tons.

In the late 1980’s Nucor entered into the production of sheet steel at a newly constructed plant in Crawfordville-Indiana.

The Crawfordville costs $50 to $75 per ton (traditional sheet steel plants) and the going price $400 per ton at that time

In 1988 Nucor entered into a joint venture with Yamato-Kogyo one of Japan’s major producers of wide-flange beams

Second mill built in Arkansas and athird built in South California (Nucor joint with Yamato-Kogyo)

Starting in a year 2000 Nucor began producing steel plate of various thicknesses and lengths

STRATEGY THREAT

AT 2000 – 2001 ECONOMIC RECESSION IMPACT US

SEPTEMBER, 11 2001 THERE’S TERRORIST ATTACK

A BIG WAVE OF IMPORTS OF LOW –PRICED STEEL FROM

FOREIGN COUNTRIES

ILLEGALLY DUMPING

EFFECT FROM THREAT

THE PURCHASE OF STEEL IS DECREASE

BANKCRUPTCY FOR SEVERAL STEEL COMPANY

NUCOR PREVENTIF

NEW ACQUISITIONS

NEW TECHNOLOGY AND NEW PLANT CONSTRUCTION

CONTINUED PLANT UPGRADE & COST REDUCTION EFFORTS

GLOBAL GROWTH VIA JOINT VENTURE

STRATEGY NEW TECHNOLOGY

o CRAWFORDSVILLE FACILITIES ( FIRST CASTRIP

FACILITY )

o NUCOR YAMATO BEAM MILL ( SECOND CASTRIP

FACILITY )

NEW PLANT CONSTRUCTION ( 2006 )

o NUCOR WOULD CONSTRUCT NEW FACILITY TO

PRODUCE METAL BUILDING SYSTEM IN UTAH, CAPACITY

45, 000 TON, 200 EMPLOY, COST $ 27 MILLION

o AND PLAN TO CONSTRUCT A STATE-OF-THE-ART-STELL

MILL IN TENNESSEE, CAPACITY 850,000 TON, 200

EMPLOY, COST $230 MILION.

STRATEGY CONTINUED PLANT UPGRADE & COST REDUCTION EFFORTS

a. Nucor’s strategy was to improve plant efficiency and keep

production costs low.

b. ISO 9000 (Quality Management Systems) and 14001

(Environmental Management Systems) certified.

c. Nucor had a program called BESTmarking.

d. Nucor’s always to improving quality with production costs

low

GLOBAL GROWTH VIA JOINT VENTURE

a. Nucor had recently entered into a joint venture with

Companhia Vale do Rio Doce (CVRD) to construct and operate

an environmentally friendly pig iron project in northern Brazil.

b.Nucor had recently partnered with the Rio Tinto Group,

Mitsubishi Corporation, and Chinese steelmaker Shougang

Corporation.

ORGANIZATION AND MANAGEMENTPHILOSOPHY

Nucor had a simple , streamlined and highly decentralized

organization structure. Most day-to-day operating decision made

by division or plant-level general managers and their staff. The

Organizational Structure at a typical plant :

WORKFORCE COMPENSATION PRACTICES

  Nucor was a nonunion “pay for performance” company with an incentive compensation system that rewarded goal-oriented individuals and did not put a maximum on what they could earn .

4 basic compensation plans :

Production Incentive Plan Department Manager Incentive Plan Professional and Clerical Bonus Plan Senior Officer Incentive Plan

EMPLOYEE RELATIONS & HUMAN RESOURCES

 Employee relations at Nucor is based on 4 principles :

1. Management is obligated to manage Nucor in such a way that employees will have the opportunity according to their productivity

2. Employees must feel confident that if they do their jobs well, then they will be employed.

3. Employees have the right to be treated fairly and they must believe in it.Employees must have a track appeal when they believe that they were treated unfairly.

4. Service Award Scholarships and Other Benefits

Nucor advantage of human resource strategy is to pay incentives exceed production plans and work safety standards are provided to production workers, Nucor makes practice to not lay off workers.

EMPLOYEE RELATIONS & HUMAN RESOURCES

Nucor Additional benefits:1. Profit Sharing2. Plan 410 (k)3. Medical & Dental Plan4. Education Cost Reimbursement5. Stock Purchase Plan by Employee6. Service Award7. Scholarships8. Other Benefits

Nucor did not use the job description Employees kept informed about company

performance and bonus share Nucor use egalitarian culture and workforce

highly motivated Nucor compensation system and culture face to

face There was a new employee orientation sessions

EMPLOYEE RELATIONS & HUMAN RESOURCES

Nucor Additional benefits:1. Profit Sharing2. Plan 410 (k)3. Medical & Dental Plan4. Education Cost Reimbursement5. Stock Purchase Plan by Employee6. Service Award7. Scholarships8. Other Benefits

Nucor did not use the job description Employees kept informed about company

performance and bonus share Nucor use egalitarian culture and workforce

highly motivated Nucor compensation system and culture face to

face There was a new employee orientation sessions

ONE OF MISSION NUCOR CORP“LOWEST COST”

Nucor’s strategy to acquisition several company (Auburn Steel Corp, ITEC Steel Corp, Trico Steel Company,etc)The first Company to use Electrict arc furnaces technology to melt scrap steel, avoid the pulley, lever pole, heavy equipment, etc.Making Steel With recycled scrap steel.Developing Site with Expectation of having several customer companies co-locate nearby to save shipping cost on their steel purchases.Performance Based Compensation

Competitor at U.S Market(China, Rusia, Korea, Turkey, Taiwan, Japan, India, Australia and Brazil)

China Russia Korean Taiwan Australia -

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193,000

121,300 115,700

48,400 60,000

575,000

517,000

260,000 265,000

162,000

20052006

P.E.S.T ANALYSIS• Political Factors• Nucor deals heavily with tax policy in the

United States paying federal, state, and local taxes. Each heavily affects their bottom line. Additionally, Nucor must understand the taxes of other countries in which they plan to implement contracts.

• Nucor, as with any large company that has a global presence, is subject to international trade agreements from the WTO, NAFTA, and the EU. It is financially imperative for a company to understand the costs associated to all regulations and tariffs on importation and exportation, especially as competition and globalization is required to maintain profits in the future.

P.E.S.T ANALYSISEconomic Factors• Much of Nucor’s growth come from

international markets, especially developing ones such as China or India and, thus, is susceptible to exchange rate fluctuation. Expressly stated, markets are attractive when their currency is weak. This was the case for the steel industry during the economic downturn in 2001. Imports soared to record highs, while exports were very low. (http://www.worldsteel.org/pictures/newsfiles/WSIF06.pdf)

P.E.S.T ANALYSISSocioeconomic Factor• Nucor values future expansion

through acquisition. Whether the new company is acquired through a buyout or hostile take-over, the effect of mixing to distinct business cultures is a risk. Loss of key knowledge employees, skilled labor, or other valuable assets must be addressed. The transitions must be smooth.

P.E.S.T ANALYSISTechnological Factors• Nucor was the first to pioneer this

technology of small factory production of a specific product and eventually increase its capacity utilization (http://www.prlog.org/10026639-us-steel-industry-outlook-2007.html)

• Technology increases efficiency of factories, decreases inventory, and enhances overall product quality.

• Technology has not only driven the manufacturing side of the steel industry but it provides great enhancements for engineering and sales.

THANK FOR YOUR ATTENTION