ructure.com/counts/3444/igments/1474195 Mindset:Acknowledge the relationship between costs and financial performance Instructions The value of the Case Study is to identify and explain in detail the principal causes of Nucor's long-term business success. Has it been a good strategy? Has it been good implementation and execution? Has it been a combination of both? What does Nucor do well that accounts for its success and industry standing? Consider the drivers of its success that include both good strategy-making and good strategy execution. Where do Nucor's best strategic opportunities lie and what should the company do next? Nucor is a fascinating success story and one of the world's most adept manufacturers in crafting and executing a low cost leadership strategy. Nucor has been a first-mover in capitalizing on cutting edge technological innovation in steelmaking to drive down costs and sustain its position as a low cost provider for well over three decades. Furthermore, Nucor's growth forcefully makes the point that a company can grow and prosper despite highly adverse industry conditions-if the company has a well-conceived and competitively astute strategy. Even though Nucor is a Fortune 500 company. It behaves like a small entrepreneurial enterprise that is trying to carve out a stronger competitive position for itself against formidable and often targer competitors. Read Case #27 Nucor Corp 2016 Contending with the Challenges of Low-Cost Foreign Imports and Weak Demand for Steel Products, p. C359 Write a 3 to 4 page double-spaced answer that addresses the issues identified in the case. Answer all the guiding questions at the end of the case and the issues below: Use the tools of industry and competitive analysis to diagnose the industry situation. Identify the key elements of Nucor's low cost provider strategy. Conduct a SWOT analysis comparing the value chains of integrated producers versus scrap recyclers. Identify the strategic issues that Nucor management must address. Include recommendations of what Nucor needs to do to remain competitively and financially successful Use APA formatting CASE 27 Nucor Corporation in 2016: Contending with the Challenges of Low-Cost Foreign Imports and Weak Demand for Steel Products connect Arthur A. Thompson The University of Alabama n 2016. Nucor Corp., with a production capacity of 29 million tons, was the largest manufacturer of steel and steel products in North America and ranked as the 13th largest steel company in the world based on tons shipped in 2014. It was regarded as a low-cost producer, and it had a sterling reputation for being a global first-mover in implementing cost- effective steel-making production methods and prac tices throughout its operations. Heading into 2016, Nucor had 24 steel mills with the capability to produce a diverse assortment of steel shapes (steel bars, sheet steel, steel plate, and struc tural steel) and additional finished steel manufactur- ing facilities that made steel joists, steel decking, cold finish bars, steel buildings, steel mesh, steel grating. steel fasteners, and fabricated steel reinforcing prod- ucts. The company's lineup of product offerings was the broadest of any steel producer serving steel users in North America. Nucor had 2015 revenues of $16,4 billion and net profits of $357.7 million, far below its 2008 pre-recession peak of $23.7 billion in revenues and $1.8 billion in net profits and also substantially worse than its 2014 revenues of $21.1 billion and net profits of $714 million. Nucor's sharp declines in sales and net profits in 2015 resulted from erod- ing market prices for many steel products and a sharp fulloff in customer orders in several major product categories, both largely due to a surge in ultra-cheap imported steel products coming from a variety of foreign sources (but mainly China). The outlook for 2016 was not encouraging. COMPANY BACKGROUND Nucor began its journey from obscurity to a steel industry leader in the 1960s. Operating under the name of Nuclear Corporation of America in the 1950s and carly 1960s, the company was a maker of nuclear instruments and electronics products. After suffering through several money-losing years and facing bankruptcy in 1961, Nuclear Corporation of America's board of directors opted for new leader ship and appointed F. Kenneth Iverson as president and CEO. Shortly thereafter, Iverson concluded that the best way to put the company on sound footing was to exit the nuclear instrument and clectronics business and rebuild the company around its profit- able South Carolina-based Vulcraft subsidiary that was in the steel joist business-Iverson had been the head of Vulcraft prior to being named president Iverson moved the company's headquarters from Phoenix, Arizona, to Charlotte, North Carolina, in 1966, and proceeded to expand the joist business with new operations in Texas and Alabama. Then in 1968, top management decided to integrate back ward into stec making, partly because of the benefits of supplying its own steel requirements for producing steel joists and partly because Iverson saw opporto nities to capitalize on newly emerging technologies to produce steel more cheaply. In 1972 the company Copyright 2016 by Arthur The All right C- PART 2 Cases Craig Stor chair and CEO through 2012. Like his predecesso adopted the name Nucor Corporation, and Iverson initiated a long-term strategy to grow Nucor into a DiMicco continued to pursue Nucor's longstanding major player in the U.S. steel industry strategy to aggressively grow the company's produc By 1985 Nucor had become the seventh largest tion capacity and product offerings via both sequlit. steel company in North America with revenues of tion and new plant construction, tons sold rose from 5758 million, six joist plants, and four state-of-the-art 11.2 million in 2000 to 25.2 million in 2008. Then Noel mills that used electric are furnaces to produce the unexpected financial crisis in the fourth quarter new steel products from recycled scrup steel. More of 2008 and the subsequent economic fallout caused over, Nucor had gained a reputation as an excellently tons sold in 2009 to plunge to 17.6 million tons and managed company, an accomplished low-cost pro revenues to nosedive from $23.7 billion in 2008 to docer, and one of the most competitively successful SIL.2 billion in 2009, manufacturing companies in the country.' A series Even though the steel industry remained in the of articles in The New Yorker related how Nucor, a doldrums until he retired in 2012. DiMicco was relatively small American steel company, had built undeterred by the depressed market demand for steel an enterprise that led the whole world into a new era and proceeded to expand Nucor's production capo of making steel with recycled scrap steel. Network bilities and range of product offerings. It was his broadcaster NBC did a business documentary that strong belief that Nucor should be opportunistic in used Nucor to make the point that American manu- initiating actions to strengthen its competitive posi- facturers could be successful in competing against tion despite slack market demand for steel because low-cost foreign manufacturers doing so put the company in even better position to Under Iverson's leadership, Nucor came to be significantly boost its financial performance when known for its aggressive pursuit of innovation and market demand for steel products grew stronger, technical excellence in producing steel, rigorous qual DiMicco expressed his thinking thusly! ity systems, strong emphasis on workforce produe tivity and job security for employees, cost-conscious Nucor uses cach economic downturn as an opportu. corporate culture, and skills in achieving low costs nity to grow stronger. We use the good times to pre- per ton produced. The company had a very stream- pare for the bad, and we use the bad times to prepare lined organizational structure, incentive-based com- for the good. Emerging from downturns stronger than pensation systems, and steel mills that were among we enter them is bow we build long-term value for our stockholders. We get stronger because our tcum the most modern and efficient in the United States is focused on continual improvement and because Iverson proved himself as a master in crafting and our financial strength allows us to invest in attractive executing a low-cost provider strategy, and he made growth opportunities throughout the economic cycle. a point of practicing what he preached when it came to holding down costs throughout the company. The During Di Micco's 12-year tenure, Nucor com- offices of executives and division general manag- pleted more than 50 acquisitions, expanding Nucor's ers were simply furnished. There were no company operations from 18 locations to more than 200 boost- planes and no company cars, and executives were ing revenues from $4.8 billion in 2000 to $19.4 billion not provided with company-paid country club mem- at the end of 2012, and transforming Nucor into the berships, reserved parking spaces, executive dining undisputed leader in providing steel products to North facilities, or other perks. To save money on his own American buyers. When DiMicco retired at the end business expenses and set an example for other Nucor of 2012, he was succeeded by John J. Ferriola, who managers, Iverson flew coach class and took the sub- had served as Nucor's president and COO since 2011. way when he was in New York City Ferriola immediately embraced Nucor's strategy of When Iverson left the company in 1998 follow- investing in down markets to better position Nucor for ing disagreements with the board of directors, he was success when the economy strengthened and market succeeded briefly by John Correnti and then Dave demand for steel products became more robust. Aycock, both of whom had worked in various roles Going into 2016, Nucor was the biggest, most under Iverson for a number of years. In 2000, Daniel cost-efficient, and most diversified steel producer in R. DIMicco, who had joined Nucor in 1982 and risen North America. It had the capacity to produce 29 mil- up through the ranks to executive vice president, was lion tons of steel annually at its 24 steel mills. All of its named president and CEO. DiMicco was Nucor's steel mills were among the most modern and efficient C-361 CASE 27 Nucor Corporation in 2016 mills in the United States. The breadth of Nicor's prodoct line in steel mill products and finished steel products was unmatched: it competed in 11 distinct product categories. No other producer of Meel prod- ucts in North America competed in more than 5 of the 11 product categories in which Nucor competed Moreover, Nucor was the North American market leader in 9 of the 11 product categories in which it had a market presence-steel bars, structural steel, steel reinforcing bars, steel joists, steel deck, cold-finished bar steel, metal buildings, steel pilings distribution, and rebar fabrication, distribution, and place. In the other two categories in North America where Nucor competed, it ranked number two in sales of plate steel and number three in sales of sheet steel. With the exception of 3 quarters in 2009, 1 quarter in 2010, and the 4th quarter of 2015. Nucor earned a profit in every quarter of every year since 1966 a truly remarkable accomplishment in a mature and cyclical business where it was common for industry members to post losses when demand for steel saggod. As of February 2016, Nucor had paid a dividend for 171 consecutive quarters and had raised the base dividend it paid to stockholders for 43 consecutive years (every year since 1973 when the company first began paying cash dividends), In years when earnings and cash flows permitted, Nucor had paid a supplemental year-end dividend in addition to the base quarterly dividend. Exhibit I provides highlights of Nucor's growth and perfor mance since 1970. Exhibit 2 shows Nucor's sales by product category for 1990-2015. Exhibit 3 contains summary of Nucor's financial and operating per- formance during 2011-2015. EXHIBIT 1 Nucor's Growing Presence in the Market for Steel. 1970-2015 Total Tons Sold to Outside Customers Average Price per Ton Net Sales (in millions Earnings before Taxes in millions Year $245 314 1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 207,000 387,000 1.159.000 1,902,000 3,648.000 7.943,000 11,189.000 12.237.000 13,442.000 17.473.000 19,109,000 20.465.000 22,118.000 22.940,000 25.187.000 17,576,000 22.019.000 23.044,000 23.092.000 23.730.000 25,413.000 22.680.000 416 399 406 436 425 354 357 359 595 621 667 $ 50.8 121.5 4824 7585 1.4816 3,4620 4,756.5 4.333.7 4,801.7 6,265 8 11,3768 12.7010 14,7513 16,593.0 23.6633 11,1903 15.8446 20.0236 19,4293 19.0520 21.105.1 16,4393 $ 22 11.7 76.1 106,2 111.2 4323 4783 179.4 227.0 70.0 1.725.9 2,0271 2.692.4 22533 2.790.5 (470.4 1949 1.169.9 7544 6936 1,102.7 5708 Preta Earning per Tom $ 10 30 66 56 35 62 48 16 19 4 96 104 129 104 116 (28) 9 53 34 30 44 26 Net Earnings fin millions) $ 1.1 7.6 45.1 585 75.1 2745 3109 113.0 1621 628 1.121.5 1,3103 1.757.7 1,4719 1,831.0 (293.6) 1341 778.2 504,6 488.0 7139 357.7 723 940 637 720 869 841 803 830 725 for Company records posted at www.cor.com accessed February 10, 2016 C PART 2 Cases in Crafting and recting Strategy EXHIBIT 2 Nucor's Sales of Steel Mill and Finished Steel Products to Outside Customers, by Product Category, 1990-2015 Tota Tons Sold Time Outside Customers in the Steel Mis Products Finished Steel Products Beber Cole Fabrication Steel See Steel Finished Sheel ROS Structural Bars Steel Plate Total Steel Slee Joints -Deck Capacity 2015 (2011 (2015 2015 (2015 12015 015 [2015 of 17 capacity capacity capacity capacity capacity capacity capacity Capacity million of of-27 29 of 29 at or ol Tons) million million million mon-715.000 -530.000 $20,000 and Other Year tona) tonal ton) ton tonal 10) tons) Products 2015 3.080 4,790 2,231 1.905 17.006 427 401 449 4.397 2014 2.560 2.442 18.691 421 396 504 5.411 2013 7.491 5.184 2.695 2.363 17,733 342 334 474 4.847 2012 7,622 5,078 2.505 2.268 17.473 291 30B 492 4,528 2011 7,500 4.680 2.338 2.278 16,796 288 312 494 5,154 2010 7.434 4,019 2.139 2.229 35,821 276 306 462 5,154 2009 5.212 3,629 1,626 1,608 12.075 264 310 330 4.596 2008 7,505 5,266 2.934 2,480 18,185 485 498 485 4,534 2007 8.266 6,287 3.154 2,528 20,235 542 478 449 1.236 2006 8,495 6,513 3,209 2,432 20,649 570 398 327 174 2005 8,026 5.983 2.866 2.145 19.020 554 380 342 169 2004 8,078 5.244 2,760 1.705 17,787 522 364 271 165 2003 6,954 5.530 2,790 999 16.263 353 237 117 2002 5,806 2,947 2,689 872 12.314 330 226 110 2001 5,074 2,687 2.749 522 11,032 532 344 203 126 2000 4,456 2.209 3,094 20 9.779 613 353 250 194 1995 2.994 1.799 1.952 6,745 552 234 234 178 1990 420 1,382 1,002 2,804 443 134 163 104 22.680 25,413 23,730 23,092 23044 22.019 17.576 25.187 22,940 22.118 20,465 19,109 17.473 13.442 12237 15.189 7.943 3,648 503 462 Other products include steelfasteners steel screws, nuts, bolts, washers, and bolt assemblies steel mesh steel grates, metal building systems,ght gauge steel framing and scrap metal Source Company records posted at www.her.com (accessed February 11, 2016 EXHIBIT 3 Five-Year Financial and Operating Summary, Nucor Corporation, 2011-2015 ($ in millions, except per share data and sales per employee) 2015 2014 2013 2012 2011 $16.439.3 $21.105.1 $ 19,052.0 $ 19,429.3 $ 20,023.6 FOR THE YEAR Net sales Costs, expenses and other Cost of products sold Marketing, administrative and other expenses 14,8580 19,198.6 17,641.4 17.915.7 18,1421 459.0 520.8 481.9 454.9 439.5 . CM PAWI CHUNG CU CHI it elected to compete. Nacer's top executives were very disciplined in executing Nucor's strategy to broaden the company's product offerings no MOVES to enter now steel product categories were made unless management was confident that the company had the resources and capabilities needed to operate the accompanying production facilities efficiently enough to be con competitive NUCOR'S STRATEGY TO BECOME THE BIGGEST AND MOST DIVERSIFIED STEEL PRODUCER IN NORTH AMERICA, 1967-2016 In its nearly 50-year march to become North Amer loa's biggest and most diversified steel producer Nucor relentlessly expanded its production capabili ties to include a wide range of steel shapes and more categories of finished steel products. However, most every steel product that Nucor prodowed was viewed by buyers as a commodity Indeed, the most com petitively relevant feature of the various steel shapes and finished steel products made by the world's dif- ferent producers was that for any given steel item, there were very few, if any, differences in the prod- ucts of rival steel producers. While some steelmakers had plants where protection quality was sometimes inconsistent or on Occasions failed to meet customer specified metallurgical characteristics, most Meel plants turned out products of comparable metallur gical quality-one producer's reinforcing bar was essentially the same as other producer's reinforcing bar, a particular type and grade of sheer steel made at one plant was essentially identical to the same type and grade of sheet steel made at another plant. The commodity mature of steel products meant that steel buyers typically shopped the market for the best price awarding their business to whichever seller offered the best deal. The case with which buyers could switch their orders from one supplier to another forced steel producers to be very price competitive. In virtually all instances, the going market price of each particular steel product was in constant flux, rising or falling in response to shifting market circumstances for shifts in the terms that par ticular buyers or sellers were willing to accept). As a consequence, spot market prices for commodity steel products bounced around on a weekly or even daily basis. Because competition among rival steel producers was so strongly focused on price, it was incumbent on all industry participants to be cost- competitive and operate their production facilities as efficiently as they could Nucor's success over the years stemmed largely from its across the board prowess in cost-efficient operations for all the product categories in which Finished Steel Products Nocor's first venture into steel in the late 1960, via is Valcraft division, was principally one of fabei. cating Meel joints and joint girders from steel the was purchased from various steelmakers. Vulcral expanded into the fabrication of steel decking in 1977. The division expanded its operations over the years and, as of 2016, Nucor's Vulcraft division was the largest producer and leading innovator of open- web steel joists, joist girders, and steel deck in the United States. It had seven plants with annual capac ity of 715.000 tons that made steel joists and joist ginders and mine plants with 530.000 tons of capacity that made stoel deck: typically, about 85 percent of the stoel needed to make these products was supplied by various Nucor steelmaking plants. Vulcraft's joist girder and decking products were used mainly for roof and floor support systems in retail stores, shop ping centers, warchouses, manufacturing facilities, schoots churches, hospitals, and to a lesser extent, multitory buildings and apartments. Customers for these products were principally nonresidential con struction contractors In 1979, Nucor began fabricating cold finished stoel products. These consisted mainly of cold drawn and turned, ground, and polished steel bars or rods of various shapes-sounds, beagons, flats, channels, and squares-made from carbon, alloy, and loaded steels based on customer specifications of end-use requirements Cold finished steel products were used in tens of thousands of products, including anchor bolts, hydraulic cylinders, farm machinery, air condi- tioner compressors, electric motors, motor vehicles, appliances, and lawn mowers. Nucor sold cold finish steel directly to large quantity users in the automo tive, furm machinery, hydraulic, appliance, and cloc tric motor industries and to steel service centers that in turn supplied manufacturers needing only relatively small quantities. In 2015, Nucor Cold Finish was the largest producer of cold finished bar products in North CASE 27 Nucor Corporation 2016 America and had facilities in Missouri, Nebraska, because U.S. manufacturers were not competitive on South Carolina, Utah. Wisconsin, Ohio, Georgia, and Ontario, Canada, with a capacity of about 920,000 cost and price. Iverson said, "We're going to bring that business back, we can make bolts as cheaply as tons per year. It obtained most of its steel from foreign producers." Nucor built a second fastener Nucor's mills that made steel bar. This factor, along with the fact that all of Nucor's cold finished facilities plant in 1995, giving it the capacity to supply about 20 percent of the U.S. market for steel fasteners. employed the latest technology and were among the Currently, these two facilities had annual capacity most modern in the world, resulted in Nucor Cold Fin- of over 75,000 tons and produced carbon and alloy ish having a highly competitive cost structure. It main tained sufficient inventories of cold finish prolacts to steel hex head cap screws, hex bolts, structural bolts. nuts and washers, finished hex nuts, and custom fulfill anticipated orders. Sales of cold finished steel engineered fasteners that were used for automotive, products were 449.000 tons in 2015, down 11 percent machine tool, farm implement construction, mili- from 504.000 tons in 2014 Nucor produced metal buildings and components tary, and various other applications Nucor Fastener obtained much of the steel it needed from Nucor's throughout the United States under several brands: mills that made steel har Nucor Building Systems, American Buildings Com Beginning in 2007. Nucor-through its newly pany, Kirby Building Systems, Gulf States Manufac acquired Harris Steel subsidiary-began fabricat turers, and CBC Steel Buildings. In 2016, the Nucor ing, installing, and distributing steel reinforcing bars Buildings Group had 11 metal building plants with trebar) for highways, bridges, schools, hospitals. an annual capacity of approximately 465,000 tons airports, stadiums, office buildings, high-rise resi- Nucor's Buildings Group began operations in 1987 dential complexes, and other structures where steel and currently had the capability to supply customers reinforcing was essential to concrete construction with buildings ranging from less than 1,000 square Harris Steel had over 70 fabrication facilities in the feet to more than 1,000,000 square feet. Complete United States and Canada, with each facility serv metal building packages could be customized and ing the surrounding local market. Since acquiring combined with other materials such as glass, wood, Harris Steel, Nucor had more than doubled its rehar and masonry to produce a cost-effective, aestheti fabrication capacity to over 1,700,000 tons annually cally pleasing building built to a customer's particu. Total fabricated rear sales in 2015 were 1.190,000 lar requirements. The buildings were sold primarily tons, up from 1.185,000 tons in 2014. Much of the through an independent builder distribution network steel used in making fabricated rear products was The primary markets served were commercial, indus- obtained from Nucor steel plants that made steel har trial, and institutional buildings, including distribu- Fabricated reinforcing products were sold only on a tion centers, automobile dealerships, retail centers, contract bid basis schools, warehouses, and manufacturing facilities. Nucor's Buildings Group obtained a significant por- Steel Mill Products tion of its steel requirements from the Nucor bar and sheet mills. Sales were 307,000 tons in 2015. an Nucor entered the market for steel mill products in increase of 5 percent over 292,000 tons in 2014 1968, when the decision was made to build a facil Another Nucor division produced steel mesh, ity in Darlington, South Carolina, to manufacture grates, and fasteners. Various steel mesh products steel bars. The Darlington mill was one of the first were made at two facilities in the United States and steelmaking plants of major size in the United States one in Canada that had combined annual production to use electric arc furnace technology to melt scrap capacity of about 128,000 tons. Steel and aluminum steel and cast molten metal into various shapes. Ele bar grating, safety grating, and expanded metal prod- tric arc furnace technology was particularly appealing ucts were produced at several North American loca- to Nucor because the labor and capital requirements tions that had combined annual production capacity to melt steel scrap and produce crude steel were fur of 103.000 tons. Nucor Fastener, located in Indiana, lower than those at conventional integrated steel mills began operations in 1986 with the construction of a where raw stoel was produced using coke ovens, $25 million plant. At the time, imported steel fus- basic oxygen blast furnaces, ingos casters, and mul- teners accounted for 90 percent of the U.S. market tiple types of finishing facilities to make crude steel C. PART 2 Cases in Ching and acting Sy from iron ore, coke, limestone, oxygen, scrap steel casters. It was much cheaper to then build and oper and other ingredients. By 1981, Nucor had four steel ate facilities to roll thin-gauge sheet steel from 15.to mills making carbon and alloy steels in bars angles. 3-inch-thick slasthan from 8 to 10-inch-thick slabe and light structural shapes, since then, Nucor had When the Crawfordsville plant first opened in 1989, undertaken extensive capital projects to keep these it was said to have costs $50 to $75 per ton below the facilities modernized and globally competitive. Dur costs of traditional sheet steel plants, a highly signifi- ing 2000-2011, Nucor aggressively expanded its cant cost advantage in a commodity market where market presence in stoel bars and by 2012 had 13 bar the going price at the time was $400 per ton. Forbes mills located across the United States that produced magazine described Nucor's pioneering use of thin concrete reinforcing bars, hot-rolled bars, rods, light slab casting as the most substantial, technological shapes, structural angles, channels, and guard rail industrial innovation in the past 50 years. By 1996 in carbon and alloy steels, in 2015. these 13 plants two additional sheet steel mills that employed thin had total annual capacity of approximately 9.1 mil. stab casting technology were constructed and a fourth lion tons. Four of the 13 mills made hot-rolled special mill was acquired in 2002. giving Nucor the capacity quality bar manufactured to exacting specifications to produce 11.3 million tons of sheet steel products The products of the 13 bar mills had wide usage and annually. Nucor also operated two Castrip sheet pro were sold primarily to customers in the agricultural duction facilities, one built in 2002 at the Crawfords automotive, construction, energy, furniture, machin- ville plant and a second built in Arkansas in 2009, ery, metal building, railroad, recreational equipment, these facilities used the breakthrough strip casting shipbuilding, heavy truck, and trailer industries technology that involved the direct casting of molten Recently, Nucor had completed a $290 million steel into final shape and thickness without further project to expand its wire rod and special quality steel hot or cold rolling. The process allowed for lower har production capabilities at three existing bar mills capital investment, reduced energy consumption, and by 1 million tons annually. The expansion enabled smaller scale plants, and improved environmental Nucor to produce engineered bar for the most demand impact (because of significantly lower emissions), ing applications and realize a significantly higher A fifth sheet mill with annual capacity of 1.8 mil. price) while maintaining its market share in commod lion tons, strategically located on the Ohio River in ity bar products by shifting production to its other bar Kentucky, was acquired in 2014, giving Nucor a total mills that were operating below capacity. Incremental flat-rolled capacity of 13.1 million tons. investments were underway in 2016 to expand Nucor's special quality steel bar production capabilities. In Entry into Structural Steel Products Also addition, an existing wire rod and bar mill in Kingman, in the late 1980s, Nucor added wide-flange steel Arizona, was renovated to boost production capacity beams, pilings, and heavy structural steel products to from 200,000 tons annually to 500,000 tons annually its lineup of product offerings. Structural steel prod. and put Nucor in a strong position to serve wire rod und ucts were used in buildings, bridges, overpasses, and rear customers in the southwestern U.S. market similar such projects where strong weight-bearing support was needed. Customers included construction Expansion into Sheet Steel In the late 1980s, companies, steel fabricators, manufacturers, and steel Nucor entered into the production of sheet steel at a service centers. To gain entry to the structural steel newly constructed plant in Crawfordsville, Indiana. segment, in 1988 Nucor entered into a joint venture Flat-rolled sheet steel was used in the production of with Yamato-Kogyo, one of Japan's major producers motor vehicles, appliances, steel pipe and tubes, and of wide range beams, to build a new structural steel other durable goods. The Crawfordsville plant was mill in Arkansas, a second mill was built on the same the first in the world to employ a revolutionary thin site in the 1990s that made the Nucor-Yamato ven slab casting process that substantially reduced the ture in Arkansas the largest structural beam facility capital investment and costs to produce flat-rolled in the Western Hemisphere. In 1999, Nucor started sheet steel. Thin-slab casting machines had a funnel operations at a third structural steel mill in South shaped mold to squeeze molten steel down to a thick Carolina. The mills in Arkansas and South Carolina ness of 1.5-2.0 inches, compared to the typically both used a special continuous casting method that 8- to 10-inch-thick slabs produced by conventional was quite cost-effective. In 2014, the Nocor-Yamato CASE 27 Nucor Corporation in 2016 6-167 mill completed a S115 million project to add several e sheet piling sections, increase production of sin However, despite Nuce's demonstrated skills in gle sheet widths by 22 percent, and provide customers operating steel mills at low costs per ton, it had been with a lighter stronger sheet covering more area at a stymied throughout the 2010-2015 period in its quest lower installed cost. Going into 2016. Nucor had the to operate its 24 steel mills as cost-efficiently as they capacity to make 3.7 million tons of structural steel were capable of being operatod. Ever since the Great Recession of 2008-2009, the combination of an anemic products annually economic recovery, depressed market demand for stoel Entry into the Market for Steel Plate Start- products, industrywide overcapacity, and fierce com- ing in 2000, Nucor began producing steel plate of petition from foreign imports in certain product cat various thicknesses and lengths that was sold to man egories had forced Nocor to operate its steel mills well ufacturers of heavy equipment, ships, barges, bridges below full capacity. Whereas in the first three quarters rail cars, refinery tanks, pressure vessels, pipe and of 2004, Nucor's steel mills operated at an average of tube, wind towers, and similar products. Steel plate 91 percent of full capacity, the average capacity utili was made at two mills in Alabama and North Caro- zation rates at Nucor's steel mills were 54 percent in lina that had combined capacity of about 2.9 million 2009, 70 percent in 2010, 74 percent in 2011.75 per tons. In 2011-2013. Nucor greatly expanded its plate cent in 2012,76 percent in 2013, 78 percent in 2014. product capabilities by constructing a 125,000-ton and 68 percent 2015 (including tons shipped to heat treating facility and a 120,000-ton normalizing outside customers and tons shipped to Nucor facilities line at its North Carolina plate mill. These invest- making finished steel products). Likewise, subparaver ments yielded two big strategic benefits: (1) enabling ape capacity utilization rates at Nucur's facilities for the North Carolina mill to produce higher-margin producing finished steel products-54 percent in 2010, plate products sold to companies making pressure 57 percent in 2011, 58 percent in 2012, 61 percent in vessels, tank cars, tubular structures for offshore oil 2013, 66 percent in 2014, and 61 percent in 2015 rigs, and naval and commercial ships: and (2) reduc- had impaired Nocor's ability to keep overall production ing the mill's exposure to competition from foreign costs for finished steel products as low as they would producers of steel plate who lacked the capability to otherwise have been at higher levels of capacity utiliza- tion. Nucor's unused capacity for producing so many match the features of the steel plate Nucor produced for these end-use customers. types of steel mill and finished steel products during 2009-2015 represented one of the longest and deepest The Cost-Efficiency of Nucor's Steel Mills periods of overcapacity in Nucor's history. All of Nucor's 24 steel mills used clectric arc fur naces, whereby scrap steel and other metals were Pricing and Sales melted and the molten metal then poured into con tinuous casting systems, Sophisticated rolling mills Since 2012. approximately 86 percent of the steel converted the billets, blooms, and slabs produced by shipped from Nucor's steel mills had gone to exter- various casting equipment into rebar, angles, rounds, nal customers. The balance of the company's steel channels, flats, sheet, beams, plate, and other finished mill shipments went to supply the steel needs of the steel products. Nucor's steel mill operations were company's joist, deck, rebar fabrication, fastener, highly automated, typically requiring fewer operating metal buildings, and cold finish operations. The big employees per ton produced than the mills of rival majority of Nucor's steel sales were to customers companies. High worker productivity at all Nucor who placed orders monthly based on their immedi- steel mills resulted in labor costs roughly 50 percent ate upcoming needs; Nucor's pricing strategy was to lower than the labor costs at the integrated mills of charge customers the going spot price on the day an companies using union labor and conventional blast order was placed. Shifting market demand-supply furnace technology. Nucor's value chain (anchored in conditions and spot market prices caused Nucor's using electric arc furnace technology to recycle scrap average sales prices per ton to fluctuate from quarter steel) involved far fewer production steps, far less to quarter, sometimes by considerable amounts-see capital investment, and considerably less labor than Exhibit 4. It was Nucor's practice to quote the same the value chains of companies with integrated steel payment terms to all customers and for customers to mills that made crude steel from iron ore. pay all shipping charges. C-36 EXHIBIT 4 PART 2 Cases in Crafting and Execut Nucor's Average Quarterly Sales Prices for Steel Products, by Product Category, 2011-2015 Average Sale Prices per Ton Sold All Steel Mill Products All Finished Steel Products Steel Plate Sheet Steel Steel Bars Structural Steel Period 2011 Qr1 Qtr 2 Qu3 $755 894 800 744 $779 803 811 5831 923 901 891 $ 880 1,029 1,021 946 $789 391 847 $1274 1.361 1,381 1.395 806 Otr 4 796 2012 Otr 1 Qu2 Otr3 Our 4 $780 759 707 690 5823 795 745 723 $866 905 973 956 $ 929 922 837 778 $824 812 775 751 $1,387 1,395 1.371 1,420 2013 Otr 1 Qtr 2 Qtr 3 Otr 4 5699 676 693 724 5732 731 708 709 $949 959 923 969 $ 769 765 753 767 $756 746 741 763 $1,380 1,374 1,369 1,378 2014 Otr 1 Our 2 Otr3 Qur 4 5744 737 750 712 $737 732 738 5941 1,039 1,011 1,063 $ 816 837 838 875 $783 789 793 776 $1,348 1.367 1,369 1.432 724 2015 Otr 1 Qtr 2 Otr3 Otr 4 $663 550 552 508 $698 623 625 558 $996 991 926 923 $ BOS 691 649 588 $732 646 635 588 $1,404 1,380 1.351 1.367 Antverage of the steel prices for steel deck, steelists and girders, steel buildings, cold finished steel products, steel mes fasteners fabricated rear, and other finished steel products Source: Company records posted of www.ucer.com (accessed February 21, 2016) CASE 27 Nucor Corporation in 2016 C-369 Nucor marketed the output of its steel mills and steel products facilities mainly through an in-house NUCOR'S STRATEGY TO sales forces there were salespeople located at most GROW AND STRENGTHEN ITS every Nucor production facility. Going into 2016. approximately 50 percent of Nucor's sheet steel BUSINESS AND COMPETITIVE sales were to contract customers (versus 65 percent CAPABILITIES in 2012-2013 and 30 percent in 2009), these con- tracts for sheet steel were usually for periods of 6 to Surting in 2000, Nucor embarked on a five-part 12 months, were noncancelable, and permitted price growth strategy that involved new acquisitions, new adjustments to reflect changes in the market price plant construction, continued plant upgrades and cost ing for steel and/or raw material costs at the time reduction cfforts, international growth through joint of shipment. The other 50 percent of Nucor's sheet ventures, and greater control over raw materials costs. steel shipments and virtually all of the company's shipments of plate, structural, and bar steel were Strategic Acquisitions at the prevailing spot market price-customers not Beginning in the late 1990s, Nucor management con- purchasing sheet steel rarely ever wanted to enter cluded that growth-minded companies like Nucor into a contract sales agreement. Nucor's steel mills might well be better off purchasing existing plant maintained inventory levels deemed adequate to fill capacity rather than building new capacity, provided the expected incoming orders from customers. The the acquired plants could be bought at bargain prices, average prices Nucor received for its various steel economically retrofitted with new equipment if need mill products are shown in the first four columns of be, and then operated at costs comparable to (or even Exhibit 4, the average prices received for sheet steel, below) those of newly constructed state-of-the-art steel bars, and steel plate in the last quarter of 2015 plants. At the time, the steel industry worldwide had were 20 to 27 percent lower than in the first quarter far more production capacity than was needed to meet of 2015 and the lowest of any quarter since 2010, market demand, forcing many companies to operate Nucor sold steel joists and joist girders, and in the red. Nucor had not made any acquisitions since steel deck on the basis of firm, fixed-price con- about 1990, and a team of five people was assembled tracts that, in most cases, were won in competitive in 1998 to explore acquisition possibilities that would bidding against rival suppliers. Longer-term supply strengthen Nucor's customer base, geographic cover- contracts for these items that were sometimes nego- age, and lineup of product offerings. tiated with customers contained clauses permitting For almost three years, no acquisitions were price adjustments to reflect changes in prevailing made. But then the cconomic recession that hit Asia raw materials costs. Steel joists, girders, and deck and Europe in the late 1990s reached the United States were manufactured to customers' specifications and in full force in 2000-2001. The September 11, 2001. shipped immediately. Nucor's plants did not main- terrorist attacks further weakened steel purchases by tain inventories of steel joists, girders, or steel deck such major steel-consuming industries as construc- Nucor also sold fabricated reinforcing products only tion, automobiles, and farm equipment. Many steel on a construction contract bid basis. However, cold companies in the United States and other parts of the finished steel, steel fasteners, steel grating, wire, and world were operating in the red. Market conditions wire mesh were all manufactured in standard sizes, in the U.S. were particularly grim. Between October 2000 and October 2001, 29 steel companies in the with each facility maintaining sufficient inventories of its products to fill anticipated orders: most all sales United States, including Bethlehem Steel Corp. and of these items were made at the prevailing spot price. LTV Corp., the nation's third and fourth largest steel The average prices Nucor received for its various fin- producers, respectively, filed for bankruptcy protec ished steel products are shown in the last column of tion. Bankrupt steel companies accounted for about Exhibit 4. 25 percent of U.S. capacity. The Economist noted CASE 27 Nucor Corporation 2016 C-371 would broaden Nucor's customer base and build profitable market share in bar steel products, In January 2007. Nucor acquired Canada-based . In August 2004, Nucor acquired a cold rolling mill Harris Steel for about $1.07 billion Harris Steel in Decatur, Alabama, from Worthington Industries had 2005 sales of Cans 1.0 billion and earnings of for $80 million. This 1-million-ton mill, which Can$64 million. The company's operations con- sisted of (1) Harris Rebar which was involved in opened in 1998, was located adjacent to the previ ously acquired Trico mill and gave Nucor added the fabrication and placing of concrete reinforcing ability to service the needs of sheet steel buyers steel and the design and installation of concrete located in the southeastern United States post-tensioning systems: (2) Laurel Steel which manufactured and distributed wire and wire prod- . In June 2004. Nucor paid a cash price of SRO ucts, welded wire mesh, and cold finished bar: million to acquire a plate mill owned by Britain and (3) Fisher & Ludlow which manufactured based Corus Steel that was located in Tuscaloosa and distributed heavy industrial steel grating, alu- Alabama. The Tuscaloosa mill, which currently minum grating, and expanded metal. In Canada, had capacity of 700,000 tons that Nucor man Harris Steel had 34 reinforcing steel fabricating agement believed was expandable to 1 million plants, 2 steel grating distribution centers, and 1 tons, was the first U.S. mill to employ a special cold finished bar and wine processing plant in the technology that enabled high-quality wide steel United States it had 10 reinforcing steel fabricat- plate to be produced from coiled steel plate. The ing plants, 2 steel grating manufacturing plants, mill produced coiled steel plate and plate prod- and 3 steel grating manufacturing plants. Harris ucts that were cut to customer-specified lengths. had customers throughout Canada and the United Nucor intended to offer these niche products to its States and employed about 3.000 people. For commodity plate and coiled sheet customers. the past three years. Harris had purchased a big . In February 2005. Nucor completed the purchase percentage of its steel requirements from Nucor of Fort Howard Steel's operations in Oak Creek Nucor management opted to operate Harris Steel Wisconsin; the Oak Creek facility produced cold as an independent subsidiary. finished bars in size ranges up to 6-inch rounds Over several months in 2007 following the Harris and had approximately 140,000 tons of annual Steel acquisition, Nucor through its new Harris capacity Steel subsidiary acquired rebar fabricator South . In June 2005. Nucor purchased Marion Steel Com- Pacific Steel Corporation, Consolidated Rebar, pany located in Marion, Ohio, for a cash price of Inc, a 90 percent equity interest in rebar fabri- $110 million. Marion operated a bar mill with cator Barker Steel Company, and several smaller transactions-all aimed at growing its presence annual capacity of about 400.000 tons, the Marion in the rebur fabrication marketplace. location was within close proximity to 60 percent of the steel consumption in the United States. In August 2007. Nucor acquired LMP Steel & Wire Company for a cash purchase price of approxi- . In May 2006, Nucor acquired Connecticut Steel mately $27.2 million, adding 100,000 tons of cold Corporation for $43 million in cash. Connecti- drawn steel capacity. cut Steel's bar products mill in Wallingford bad . In October 2007, Nucor completed the acquisition annual capacity to make 300.000 tons of wire rod of Nelson Steel, Inc. for a cash purchase price of and rear and approximately 85.000 tons of wire mesh fabrication and structural mesh fabrication, approximately 553.2 million, adding 120,000 tons of steel mesh capacity products that complemented Nucor's present lineup of steel bar products provided to construc- In the third quarter of 2007. Nucor completed the tion customers acquisition of Magnatrax Corporation, a leading provider of custom-engineered metal buildings, for In late 2006, Nucor purchased Verco Manufactur- a cash purchase price of approximately $275.2 mil- ing Co, for approximately $180 million: Verco lion. The Magnatrax acquisition enabled Nucor's produced steel floor and roof decking at one loca- tion in Arizona and two locations in California Building System Group to become the second lary- est metal building producer in the United States The Verco acquisition further solidified Vulcraft's market leading position in steel decking, giving it . In August 2008, Nucor's Harris Steel subsid- total annual capacity of over 500,000 tons. iary acquired Ambassador Steel Corporation for C-372 PART 2 Cases in rating and executing Strategy a cash purchase price of about $185.1 million 75,000 tons per year. These facilities, purchased for about $75 million, strengthened Nucor Ambassador Steel was one of the largest inde already strong competitive position in cold.rs pendent fabricators and distributors of concrete ished steel bars by expanding Nucor's geographic reinforcing steel-in 2007, Ambassador shipped 422,000 tons of fabricated near and distributed coverage and range of cold-finished product another 228.000 tons of reinforcing steel. Its busi offerings ness complemented that of Harris Steel and rep- resented another in a series of moves to greatly Aggressively Investing to strengthen Nucor's competitive position in the Expand the Company's Internal robar fabrication marketplace Production Capabilities Another small rebar fabrication company, Free Complementing Nucor's ongoing strategic efforts to State Stoel, was acquired in late 2009, adding to grow its business via acquisitions was a strategy ele Nucor's footprint in rebar fabrication ment to invest aggressively in (1) the construction In June 2012, Nocor acquired Skyline Steel, LLC and its subsidiaries for a cash price of approxi- of new plant capacity and (2) enhanced productie capabilities at existing plants whenever management mately $675.4 million Skyline was a market leading distributor of steel pilings, and it also spotted opportunities to boost sales with an expanded range of product offerings and/or strengthen its.com processed and fabricated spiral weld pipe piling. rolled and welded pipe piling, cold-formed sheet petitive position vis-a-vis rivals by lowering costs piling, and threaded bar. The Skyline acquisi- per ton or expanding its geographic coverage. The tion paired Skyline's leadership position in the purpose of making ongoing capital investments was steel piling distribution market with Nucor's own to improve efficiency and lower production costs Nucor Yamato plant in Arkansas that was the cach and every facility it operated. market leader in steel piling manufacturing. To This strategy element had been in place since Nucor's carliest days in the steel business. Nucor capitalize on the strategic fits between Skyline's business and Nucor's business, Nucor launched a always built state-of-the-art facilities in the most eco- S155 million capital project at the Nucor- Yamato nomical fashion possible and then made it standard mill to (1) add several new sheet piling sections. company practice to invest in plant modernization (2) increase the production of single sheet widths and efficiency improvements whenever cost saving by 22 percent, and (3) produce a lighter, stron- opportunities emerged. ger sheet covering more area at a lower installed Examples of Nucor's efforts included the cost outcomes that would broaden the range following: of hot rolled steel piling products Nucor could . In 2006, Nucor announced that it would construct market through Skyline's distribution network a new $27 million facility to produce metal build in the United States, Canada, Mexico, and the ings systems in Brigham City, Utah. The new Caribbean plant, Nucor's fourth building systems plant, had . In 2014, Nucor acquired Gallatin Steel Company capacity of 45,000 tons and gave Nucor national for approximately $779 million. Gallatin produced market reach in building systems products. a range of flat-rolled steel products (principally In 2006, Nucor initiated construction of a S230 mil- steel pipe and tube) at a mill with annual produc. lion state-of-the-art steel mill in Memphis, Tennes- tion capacity of 1.8 million tons that was located set, with annual capacity to produce 850.000 100 on the Ohio River in Kentucky, The Gallatin mill of special quality steel bars. Management believed strengthened Nucor's position as the North Amer. this mill, together with the company's other special ican market leader in hot-rolled steel products by bar quality mills in Nebraska and South Carolina boosting its capacity to supply customers in the Midwest region, the largest flat-rolled consuming would give Nucor the broadest, highest-quality and lowest-cost offering of special quality steel bar in market region in the United States. North America In 2015, Nucor acquired Gerdau Long Steel's two facilities in Ohio and Georgia that produced cold- In 2009, Nucor opened an idle and newly reno- drawn steel bars and had combined capacity of vated $50 million wire rod and bar mill in King man, Arizona, that had been acquired in 2003 6373 CASE 27 Mc Coromino with a path to driving down costs person and or leapfrogging competitors in terms of product quality range of product offerings, and/or ma ket share Production of straight-length rebar, coiled rebar, and wire rod began in mid-2010, the plant had initial capacity of 100,000 tons, with the ability to increase annual production to 500,000 tons. . The construction of a S150 million galvanizing facility located at the company's sheet steel mill in Decatur, Alabama, gave Nucor the ability to make 500.000 tons of 72-inch-wide galvanized sheet steel, a product used by motor vehicle and appliance producers and in various steel frame and steel stud buildings. The galvanizing process entailed dipping steel in melted zinc at extremely high temperatures, the zinc coating protected the steel surface from corrosion In 2013 Nucor installed caster and hot mill upgrades at its Berkeley, South Carolina, sheet mill that enabled it to roll light-gauge sheet steel to a finished width of 74 inches. This new capabil. ity (which most foreign competitors did not have) opened opportunities to sell large quantities of wide-width, flat-rolled products to customers in a variety of industries while at the same time pro viding the mill with less exposure to competition from imports of less wide, flat-rolled products . A 2016 project to install a $75 million cooling process at the Nucor-Yamato mill in Arkansas was expected to generate savings on alloy costs of $12 million annually. Nucor's biggest success in pioneering trailbla ing technology had been tits Crawfordville. Indi- ana, facilities where Nucor installed the world's first facility for direct strip casting of carbon sheet stoel process called Castrips. The Castrip process, which Nucor tested and refined for several years before implementing it in 2005, was a major tech- nological breakthrough for producing trolled, carbon, and stainless steel in very thin gauges because (1) it involved for fewer process steps to cast metal at or very near customer-desired thicknesses and shapes and (2) the process drastically reduced capital outlays for equipment and produced sizable savings on operating expenses (by enabling the use of cheaper grades of scrap metal and requiring 90 percent less energy to process liquid metal into hot rolled steel sheets). An important environmental benefit of the Castrip process was cutting green- house gas emissions by up to 80 percent. Seeing these advantages earlier than rivals, Nucor manage- ment had the foresight to acquire exclusive rights to Castrip technology in the United States and Brazil Once it was clear that the expected benefits of the Castrip facility at Crawfordsville were indeed going to become a reality, Nucor in 2006 launched con- struction of a second Castrip facility on the site of its structural steel mill in Arkansas Since technological breakthroughs (like the Cas- trip process) were relatively rare, Nucor management made a point of scouring locations across the world for reports of possible cost-effective technologies, ways to improve production methods and efficiency. and new and better equipment that could be used to improve operations andlor lower costs in Nucor's facilities. All such reports were checked out thor- oughly, including making trips to inspect promising new developments firsthand if circumstances war ranted. Projects to improve production methods or install more efficient equipment were promptly under- taken when the investment payback was attractive. The Drive for Improved Emiciency and Lower Production Costs When Nucor acquired plants, it drew upon its ample financial strength and cash flows from operations to immediately fund efforts to get them up to Nucor standards--a process Nucor's Strategy to Be a First-Mover in Adopting the Best, Most Cost- Efficient Production Methods The third element of Nucor's competitive strategy was to be a technology leader and first-rate operator of all its production facilities-outcomes that senior executives had pursued since the company's earliest days. Two approaches to improving and expanding Nucor's steelmaking capabilities and achieving low costs per ton were utilized: Being quick to implement disruptive techno logical innovations that would give Nucor a sus- tainable competitive advantage because of the formidable barriers rivals would have to hurdle to match Nucor's cost-competitiveness and/or prod- uct quality and/or range of products offered. Being quick to implement ongoing advances in production methods and install the latest and best steelmaking equipment, thus providing Nucor Capital Expenditures 5689 C-374 PART 2 Casesining and cuting Strategy that employees called "Nucorizing." This included EXHIBIT 5 Nucor's Capital not only revising production methods and installing Expenditures for New better equipment but also striving to increase oper Plants, Plant Expansions, tional efficiency by reducing the amount of time. New Technology space, energy, and manpower it took to produce stoel products and paying close attention to worker safety Equipment Upgrades, and environmental protection practices and Other Operating Simultaneously, Nucor's top-level executives Improvements, 2000-2015 insisted upon continual improvement in product quality and cost at every company facility. Most all Capi of Nucor's production locations were ISO 9000 and ISO 14000 certified. The company had a "BEST- Year Un millions marking" program aimed at being the industrywide 2009 $4150 2008 $1,019.0 best performer on a variety of production and et 2001 2610 2009 390.5 ciency measures. Managers at all Nucor plants were 2002 accountable for demonstrating that their operations 2010 2440 3452 were competitive on both product quality and cost 2003 2154 2011 4506 vis--vis the plants of rival companies. A deeply 2004 2850 2012 1,019,3 embedded trait of Nucor's corporate culture was the 2005 3315 2013 1.230.4 expectation that plant-level managers would be per- 2006 338.4 2014 sistent in initiating actions to improve product qual 2007 5204 2015 3648 ity and keep costs per ton low relative to rival plants. Nucor management viewed the task of pursuing operating excellence in its manufacturing operations Source Company records, accessed at www.com.au as a continuous process. According to former CEO dates data for 2009-2015 are to the 2013 10-report 3 the 2015 10% report. D. 45 Dan DiMacco: We talk about climbing a mountain without a peak to describe our constant improve- ments. We can take pride in what we have accom- plished, but we are never satisfied, and yield better profit margins than could be had by The strength of top management's commitment producing lower-end or commodity steel products, to funding projects to improve plant efficiency, keep Examples included: costs as low as possible, and achieve overall operat ing excellence was reflected in the company's capital Adding new galvanizing capability at the Decatur, expenditures for new technology, plant improvements Alabama, mill that enabled Nucor to sell 500.000 and equipment upgrades (see Exhibit). The bencficial tons of corrosion-resistant, galvanized sheet steel outcomes of these expenditures, coupled with compa for high-end applications nywide vigilance and dedication to discovering and Expanding the cut-to-length capabilities at the implementing ways to operate most cost-efficiently, Tuscaloosa, Alabama, mill that put the mill in were major contributors to Nucor's standing as North position to sell as many as 200.000 additional tons America's lowest-cost, most diversified provider of per year of cut-to-length and tempered steel plate steel products. Shipping 250.000 tons of new steel plate and struc- tural steel products in 2010 that were not offered Shifting Production from in 2009, and further increasing shipments of these Lower-End Steel Products to same new products to 500,000 tons in 2011 Value Added Products Completing installation of a heat-treating facility at the Hertford County, North Carolina, plate mill During 2010-2015. Nucor undertook a number of in 2011 that gave Nucor the capability to produce actions to shift more of the production tonnage at as much as 125,000 tons annually of heat-treated its steel mills and steel products facilities to "value added products that could command higher prices steel plate ranging from 3/16 of an inch through 2 inches thick. . CASE 27 Nucor Corporation in 2016 C-315 Installing new Vacuum degassers at the Hickman, Arkansas, sheet mill and Hertford County, North with high-strength, low-alloy grade chemistry Carolina, mill to enable production of increased both projects helped Nucor grow sales of value volumes of higher value sheet steel, steel plate, added structural steel products that had above- steel piping, and tubular products average profitability Acquiring two Gerdas Long Steel facilities in Investing $290 million at its three steel bar mills to enable the production of steel bars and wire rod 2015 that produced higher-margin, value-added cold-finished bars sold to steel service centers for the most demanding engineered bar applica and other customers across the United States tions and also put in place state-of-the-art quality inspection capabilities. The project enabled Nucor Product upgrades had also been undertaken at to offer higher value steel bars and wire rod to several Nucor facilities making cold-finished and customers in the energy, automotive, and heavy fastener products. Senior management believed that truck and equipment markets (where the demand all of these upgrades to higher value product offer for steel products had been relatively strong in ings would boost revenues and earnings in the years ahead. recent years) Completing installation of a new 120,000 ton Global Growth via Joint Ventures normalizing process for making steel plat