Nucor Case Anlaysis
By:
Hardik Mishra (B08010)
Kaushambi Ghosh (B08012)
Pankaj Agarwal (B08020)
Ritesh Chowdhary (B08026)

Agenda
• Nucor Corporation
• Mr. Iverson’s Concern
• S.W. Analysis of Nucor
• O.T. in U.S Steel Market
• Decision

Nucor Corporation
• Founded in 1904 – by Ransom Eli Olds
• Started as a motor car manufacturer under the name
“REO”
• Changed 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.

Mr. Iverson’s Concern
• Commit to a new steel mill
• Viability of CSP technology in long run
• To be a leader or a follower
• Resource Constraint

Strengths of Nucor
• Administration
 Flat hierarchy
 Knowledge to set up steel plants economically and operate
them efficiently
• Employee Relations
 Equality
 Empowerment
 Performance based compensation
 Lower attrition rates

Strengths of Nucor
• Operations
 Commendable and highly trained work force
 Strategically Located Plants
 Continuous adoption of new technology
 Low ordering costs for buyer
• Financial
 Debt to equity ratio is 0.18
 Market to book ratio is 2.05
 Assured sales of 33% internally
 Lower attrition rates
 Tight Cost Control

Weaknesses of Nucor
• Plants were not able to fulfil orders at times
• Low end products
• Limited openings for growth due to impossibility to diversify
• Non providence of discounts for preferred customers- loss of a
differentiating platform against competitors and imports
• Environmental issues
• Too much dependence on the US Economy
• They don’t do their own R&D

Opportunities and Threats in
US Steel Market
• Opportunities
 Adoption of continuous casting technologies by the price followers can drive
down costs by 15 %.
 Reduce premium to compete with mini mills and imports.
 Presence of many players can give opportunity for inorganic growth.
• Threats
 Fast Growing Imports
 Increasing Labour Costs
 Rising Debt to Equity Ratios
 Some sectors which are dependent on steel have a slow growth rate like steel

Decision
• Criteria as per Company policy to decide on capital
project
– Previous Capital Expenditure allow 100% commitment to
the project under evaluation
– 25% ROA required within five year of plant start up
– Investments on equipments with longer paybacks will be
accepted if capacity increases than for those that
reduced costs
– Restricting debt equity ratio to less than 30% and not
issuing new stock