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Nucor

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Submitted By debu2112
Words 1539
Pages 7
Ques1:
ECV Fit for Nucor
Environment
• Outdated technology, rising cost competitive imports, and unfavourable labour costs and contracts resulting in restructuring in the industry – job cuts and capacity cuts
• Initially minimills produced low end structural products enjoyed various advantages such a decline in demand for scrap metal (a critical input for them) from integrated players, reduction in minimal efficient scale of production and capital cost per ton of capacity by a factor of 10, closer to market locations
• Currently minimills have expanded their product base (to high end products) and geographic focus, thereby resulting in break-down of geographic insulation. This resulted in reduction in volume growth, which reached single digits in 1980s
• Reorganization and buy-outs of other mini-mills in the face of changing environment
• R&D going on for evaluation of various alternative casting technologies. None proved commercially feasible yet
Company
• Faced tough times until the hiring of CEO Ken Iverson in 1962. He decided to divest most of the businesses and focus on the core steel business. He has also risked to build company’s modern minimill in Darlington in 1962
• Two pillars of success: Build steel plants economically and operate them efficiently
• Second most productive steel maker globally
• Flat hierarchical structure with only 5 layers of management, with clear distinctions of roles, responsibilities and autonomy. Capital budgeting - top management, Other decisions - plant management, Strict minimal level of 25% set for annual contribution over net assets
• Green compensation system: Low base and high variable pay, no discrimination on designations, In addition to the concerned plant, other company plants also sent regular reports to promote interplant competition (also, formal and informal channels existed for interplant

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