Nucor Corporation: Competing against Low-Cost Steel Imports
Week 8 Assignment
Bus 599

Nucor Corporation is today one of North America largest steel maker company. Although the company has a strong position in the steel market today, things have not always been as positive. According to Crafting & Executing Strategy, Nucor was first known as Nuclear Corporation of America, a company involved in the nuclear instrument and electronic business in 1950’s and early 1960’s. Facing bankruptcy, the company changed direction and decided to invest in the stable steel-joist business. The new name, Nucor Corporation, came along with the change in 1972 to break away from the nuclear image and embrace the new venture. This transformational change was due to the vision of new CEO and president, F. Kenneth Iverson. His strategic initiatives revealed to be a blessing as Nucor Corporation has been successfully growing since its creation.
Discuss the trends in the steel industry and how it may impact Nucor’s strategy.

The electric arc furnace technology was introduced in 1960. The “mini-mills” was limited when compared to integrated mills in the industry. In addition, the operating costs of companies are lower compared to integrated mills because they use electric arc furnaces that can produce various steel products to minimize production costs. (Thompson, Strickland, & Gamble, 2010). Nucor Corporation started using thin-slab casting during the 1980’s and it was their newest technology at that time. The electric arc furnace using Mini-mill were still operating and they are the competitors of the company. They continue to operate because they have secured market segments which demand strip products and flat-rolled carbon sheets. These products contribute around 50-60 percent of the total production in the steel industry (Thompson, Strickland, & Gamble, 2010). The strategic move Nucor took was expanding their operations so that they can reach out to more customers. The steel industry was also affected by the economic recession. It affected the total purchases made of steel because certain industries reduced their purchases and these industries were the ones with the largest consumption. This recession forced steel companies to act and many of them did measures to protect themselves from going bankrupt. New products were imported to the country as they were priced lower than most of what the local companies produced. Nucor Corporation brought down their prices to that level so that they can still be competitive. Even with the market situation they had during those years, they still found it wise to start their expansion efforts. Their actions include buying out and partnering with other local companies who were on the verge of bankruptcy (Thompson, Strickland, & Gamble, 2010). The fast development of technology led Nucor to come up with another strategy that they could use and it was having a market advantage that would help them become a leader in the industry. This led to the development of a new technology called Castrip, an advancement of the previous technologies used for producing materials such as carbon steels, stainless, and flat-rolled because it can be customized to what the customers demand in terms of the thickness and the shape of the product. An increase in their investment also made a contribution to another strategy that they came up which was a plan that would increase efficiency and minimize their costs. With the new technology they were using, production costs were lower and plant efficiency improved. The income they generated in 2005 was used to put up their current plant in Memphis, Tennessee and Brigham City, Utah (Thompson, Strickland, and Gamble, 2010). Nucor expanded internationally with joint venture efforts as part of another strategy they developed. Companhia Vale do Rio Doce was the first company that Nucor had a joint venture with which marked their first international effort. The following joint venture they had was together with other companies that include Chinese Shougang Corporation, Mitsubishi Corporation, and Rio Tinto Group aimed in developing the Hisment technology to be used by Rio Tinto for their West Australia branch. Next would be an expansion plan geared towards producing a product that would replace scrap steel at lower costs. Trinidad was the location for their newest site that received all their iron ores and reduced iron so that it can be shipped to the sites they had in the US (Thompson, Strickland, & Gamble, 2010).
Discuss the organizational structure and management philosophy at Nucor.
The organizational structure at Nucor includes supervisor/professional staff, department managers, general managers, and workers being paid per hour. The structure for their organization encouraged fast decision-making and application of the necessary changes for their workers. Decentralization in their plants had one general manager and its staff being in-charge of almost all the operation in that plant. They have 4 cold-rolled product plants and 3 building systems plants which have independent operations however control was exercised through group managers that oversee the daily operation of plants that can affect the overall profitability of the company. In their organizational structure, they are considered to be vice presidents in terms of their corporate structure they had (Thompson, Strickland & Gamble, 2010). Based on the 2006 report for the company, their main office comprises of 66 executives, a relatively small team of decision-makers. The philosophy that the company followed was a corporation must have highly-trained executive, but, they must be only a small group in order for the company to be guided and delegation of some of that tasks can be given to their managers. Every plant in operation has its own sales manager and he’s the one in-charge for the sale of the items that their plants produce. The structure their plants follow is having departments like human resource, accounting, and engineering in each one. These plants are the ones that contribute 25% of the totals earning of the company accounted for their return on assets. Once one of these managers didn’t meet the standards set by top management, replacement would be immediate and it shall be decided by their executives. Corporate would tend to let plants that had good management because of the trust the plant manager has gained (Thompson, Strickland, & Gamble, 2010).
Identify three (3) HRM issues related to strategy implementation and recommend actions to address these issues.
With a new direction, a new strategy has to be implemented to build up the company to brighter skies. First, the company has to supply its own Steel. As stated in Crafting & Executing Strategy, the company already has a small but profitable South Carolina steel-joist fabricator called Vulcraft. However, with high prices and weak quality of some steel manufacturers, Iverson decided to invest in steel, and the company developed steel manufacturing plants to become self-efficient. The new plants not only produced good steel, but it also produced new products like the cold finished bars; which was used in tons other constructions electronic elements like anchor bolts, ceiling fan motors, farm machineries, and many more.
Second, the company needed some strategic acquisitions to gain market share. With the success experienced with Nucor’s cold finished products, the company was financially well established compared to other competitors. Consequently, when event of September 2001 caused a lack steel production in the world, many companies filed for bankruptcy and Nucor found an opportunity to acquire new businesses, and expend its plants in the U.S. As mentioned in Crafting & Executing Strategy, Nucor acquired several companies and their assets among which, Auburn Steel, ITEC Steel Inc, Trico Steel Company, Birmingham Steel Corporation, and many more. Nucor was definitely on the rise, and since it was an electronic business before the steel business, Nucor made sure to bring new technology to its plants to maximize production and therefore lower cost.
Finally, a company cannot be considered a leader in the U.S. market without an international presence. Nucor studied a global expansion, but instead of going along in such competitive market, the company created successful joint ventures with different companies with aim to use new technology to produce new good quality iron at lower costs. According Crafting & Executing Strategy, some of these companies is the Brazilian Companhia Vale do Rio (CVRD), Rio Tinto Group, the Japanese Mitsubishi Corporation, and the Chinese steelmaker Shougang.
Nucor is the perfect example of a successful transformational organization. With a new leadership and a new vision, company has developed new strategy in the Steel business to leave from the bottom to the top of success ladder. New products, strategic acquisitions, the use of technology and some partnership with international steel corporations were necessary to remain successful. That said, the company could not have done it with the great culture that makes sure to recompense employees for their hard work. As established in Crafting & Executing Strategy, in 2007, Nucor Corporation was the second largest steel producer in North America.

References
Thompson, A., Strickland III, A.J., Gamble,E. (2010). Crafting and Executing Strategy:
The Quest for Competitive Advantage: Concepts and Cases. USA: The McGraw-Hill Companies, Inc.