Nucor at a Crossroads

Nucor is the largest steel manufacturer in the United States. It remains a profitable company despite being in one of the most cyclical industries in the economy. Nucor enjoys this success for several reasons, employee relations, quality, productivity, and aggressive pursuit of innovation and technical excellence. Nucor's strategy is that of a low cost provider, they know they are selling a commodity and understand their competitive edge in the industry is lowering prices through innovation and productivity. The company operates primarily in two business areas, steel mills and steel products.

This report discusses the challenges that The Nucor Corporation faces during this era of social and economic climate change. Using Porter's Five Forces Analysis and Four Generic Strategies, we will assess the steel industry standards as it relates to the strategies implemented by the Nucor Corporation. We will also assess what Nucor’s strengths and weaknesses are, and if they will be able to continue

As the market and industry changes, minimills and CSP would mature to improve quality, and further widen the gap between themselves and integrated producers such as USS. Sooner or later, USS would have to modify its production and business models to survive the industry. If it does not do that right now, there is a good possibility that it will be too late.

Nucor has been facing many industry challenges including the overall development of the industry. They are competing with foreign firms on cost and efficiency. Nucor has a low cost strategy because as they say their product is not necessarily very attractive. It does not have attractive or unique selling features other than its cost. The commodity of steel is in a very competitive market. Nucor understands that innovation and productivity are going to be key factors to keep their buyers satisfied with their prices. Nucor is facing many challenges with a growing world market and many of their competitors merging in order to create stronger more dominate

Nucor Corporation is the largest steel producer in the United States and had net sales of $12.7 billion in 2005. Nucor is the nation 's largest recycler. In 2004, Nucor recycled approximately 17 million tons of scrap steel, with 5 million of those tons being automobiles. Nucor 's origins are with auto

Nucor Corporation with 24 plants/divisions and 8,000 employees, operated in nine states recycling more than 10 million tons of scrap steel annually. Producing carboy and alloy steel in bars, beams, sheet, and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; and metal building systems, the corporation was known as the most modern and efficient, having streamlined organizational structure,

Another recommendation that I have for Nucor is instead of buying existing plant capacity, make new plants elsewhere or form a joint venture with a supplier to help save money. (Exhibit 3) This would decrease cost of supplies so they would have the extra money to build elsewhere or build a ne plant. By using the SWOT analysis (Exhibit 1) it let me break up Nucor into different parts to see what their strengths and weaknesses are. Nucor is solid with technology and treating the employees correct but the weaknesses that affect Nucor are more market based with some internal problems. Nucor has products for many different industries including automotive and housing. This can cause issues for Nucor if those industries take a fall, which they have over the last 5 years. It’s a good idea to be in these industries but Nucor has to realize what can happen to sales and revenues when one or both of those industries take a fall. Nucor has been expanding more in the United States, recently just building a plant in Louisiana (Exhibit 5). This plant will be a 750 million dollar purchase and will be a mill for pig iron. Nucor is expanding all over the United States but needs more presence internationally plan and simple. Nucor is a solid company with shareholder equity increasing each year; they have a solid stock in the NASDAQ market and continue to be a healthy steel company. They can and will

The market size is shrinking because of the increase in competing international steel companies. The number of rivals in America is declining due to higher labor costs than in foreign countries. There is a very fast pace of technology in the steel industry and it seems that the company, that obtains the newest technology, flourishes. This is due to the difficulty in lower costs of steel production. Better technology is one of the only ways to decrease costs because labor is pretty much at a set cost and all that is left is the cost of iron and making the steel. If a

Nucor is a classic case in how a firm can develop sustainable competitive advantages through resources that fit the VRIO criteria. It is worth noting that Nucor has achieved this in an industry that few would describe as attractive.

Until 2009, Nucor operated in an industry which experienced significant output declines during recent decades. The U.S. steel industry was operating at capacity levels of less than 50 percent and had lost more than 50,000 jobs since 2000. Growth of the Chinese steel industry posed a serious threat for domestic steel producers (Scott, 2009). Since that time, however, the U.S. steel industry has picked up momentum in response to soaring demand by the automobile and construction industries. Steel is the preferred material by the construction industry because of its performance, strength, reliability and versatility. In addition to construction, the automobile, energy and container industries have all been responsible for increasing steel consumption (Market Research.com, 2011).

The core strategy of Nucor is that of cost leadership via the use of technology. Through innovation and the use of high quality technology to process their steel, Nucor was able to achieve this cost advantage.

Over the years Nucor emerged as a market leader in the American steel producing industry due to its sustainable growth strategies and incorporation of sophisticated technologies that enables the company to grow exponential and become a market leader by offering high quality steel products at lower costs. The company backed its growth strategies by massive integration in the American market. However, this growth strategy proved to be predominant in capturing the American market thus ignoring the potential competitive threats that could come from foreign steel producers. This included both steel producers integrating with American minimills and foreign producers who used America as a lucrative export market and dumped their products.

Nucor has created a company that is both internally and externally fit to the environment. The firm responds well to the driving forces of the industry and has opted to take a low-cost strategy with the relentless pursuit of innovation and strong employee productivity in order to combat the issues of the steel industry. In 2000, Nucor decided to expand its operations by acquiring new firms and new factories while continuing with its low-cost operations. The competitive strategy of Nucor has helped it become one of the leading manufacturers of steel and steel products in the United States.

Later, many Third World countries such as Brazil built their own steel industries and large U.S. steelmakers faced increased competition from smaller, nonunion mills. The U.S. produced about half of the world's steel in 1945; by 1991 it was the third largest producer, with only 11% of the world market, behind the former Soviet Union and Japan. Since the 1970s, growing competition and the increasing availability of alternative materials, such as plastic, slowed steel industry growth; employment in the United States steel industry dropped from 2.5 million in 1974 to 1.6 million in 1991. Global production stood at 736 million tons in1991, down from 786million tons in 1988 (The Columbia Encyclopedia, 1993).

“In the 20 years to 2000, the world’s 40 largest steel companies made cumulative losses before tax of US$10 billion, in spite of investing around US$75 billion in new capital equipment. In the following five years, profitability increased but the return on capital was still low (…)”.