Nucor

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  • Rivalry: High  The steel industry is mature with intense competitionPrice war among competitor Low product differentiationBuyers: High  Lack of differentiation in the steel business Low switching costs Price competitionSupplier: Low Many supplier of raw material Import strategy RecycleNew entrants: High  High Investment Labor Cost Trade PolicySubstitute: Moderate  Aluminum, ceramics, cement, composites, glass, plastic and wood There are industry need steel: automobile
  • Policies open communicatio
  • Nucor corporation’s primary inbound logistics are scrap metal and electricity.Nucor recently purchased its primary supplier the David J. Joseph Company. This is acompetitive advantage because it gives them a direct connection to their primary inputneeded to make steel. Nucor’s steel is 60% scrap metalIn addition to this Nucor also obtained 2,000+ railcars to helpmove steel in the dealDramatically reduce the amount of time, enegy, and manpower needed to produce each coil, also saving space.In enviromental concern, castrip micro mills consume 84% less energy than the conventional mill with 75% reduction in green house emition.Mini mills benefits:menggunakan natural resource Lebih sedikit daripada conventional millsSetiap ton baja yang diproduksi oleh Mini Mills mengurangi penggunaan: - 2.500 pound iron ore (bijih besi) - 1.400 pound coal (batu bara) - 120 pound limestone (batu kapur) - 1.705 KW of electricity
  • Value creation : High Incentive for Supplier, Backward Integration through iron pellet production, New Steel Technology for Higher Quality
  • Nucor

    1. 1. MUHAMMAD FAJAR 29109359ANGGA SATRIA 29109370YUDHAWIJAYA IMANDARU 29109386
    2. 2. CASE OVERVIEW
    3. 3. • Nucor and its subsidiaries manufacture and sell steel and steel products in the United States and abroad. Nucor is the United States’ largest steel manufacturer, and the nation’s largest recycler.• Nucor has grown to be one of the nation’s largest manufacturing companies and one of the most profitable companies in American industry.• There are many challenges Nucor has faced in the past decades, and many yet to come and Nucor grows into the future. Nucor needs to continue to focus on its core competencies in its effort to gain market share and sustain its earnings growth.
    4. 4. COMPANY BACKGROUND
    5. 5. • Founded in 1904– by Ransom Eli Olds (REO Motor Car Company).• Nuclear Corporation of America Inc (1955)• Strategic realignment around the Vulcraft steel joists division (1965 – 1966)• Expansion in steel joists, and the introduction of minimills (1966 – 1970)• Rapid growth in steel production and fabrication (1970 – 1986)• Expansion of product line (1986 – 1996)• Nucor without Iverson, moving forward with new leadership (1996 – 2006)
    6. 6. Timeline1905 Unlikely Connection 1980 Fortune 5 Hundred1955 Nuclear Family 1986 Fasten Up1962 Conglomeration 1988 Beaming Business Fascination1965 Iverson Takes Over 1989 A World Fist1966 Steel Resolve 1995 Iverson Step Down1969 Mini Might 2000 Dan DiMicco Take The Helm1971 Nuclear goes Nucor 2002 Introducing The Micro Mills1972 On The Big Board 2003 Leveling The Playing Field1974 Smart Start 2007 On a Roll1979 Cold Start
    7. 7. Product Light Structural Steel Sheet Angles Carbon Stainless Steel Bars Alloy Steels WireHeavy Structural Wide-Flange Metal Buildings Steel Products Steel Beams
    8. 8. Evolution of The US Steel Industry
    9. 9. CASE ANALYSIS
    10. 10. P.E.S.T.E.L Analysis • Political StabilityPolitical and • International trade law and policy Legal • Domestic tax incentives and subsidies • Dumping policy • Economic recessions Economic • Energy prices • Inflation and Currency rates • Economic growth • Employment policy Social • Provision of employment • Labor cost • Mini-mills technologyTechnology • Information technology infrastructure • PollutionEnvironment • Carbon Emission
    11. 11. Industry Analysis Intensity of Threat of competitive new rivalry entrants Bargaining Threat of power ofsubstitute customers Bargaining power of suppliers
    12. 12. TWOS AnalysisThreat Weakness- Foreign Steel Imports - Market Price Dependent Upon Demand- Increasing Energy Prices -Too much dependence on the US- Environmental Issue: Carbon EconomyEmissions - They Cannot Effectively Serve- Increased Competition from Foreign International MarketsCompetitors- Increasing Labor CostsStrengths Opportunity- Egalitarian Corporate Culture - Increase Market Share by Expanding- Low-Cost Leader in North America Operations- High Productivity - Continue Investment in Innovative- Incentive-Based Compensation Joint-VenturesScheme - Patent Technologies-Technological Innovation- Highly Automated Plants- Innovative International Joint-Ventures
    13. 13. Competitive Advantage Technology Innovation Corporate Culture Operational Low Cost Excellence Structure
    14. 14. Core Valuable Rare Costly to Non Competitive PerformanceCompetencies Imitate Substitutable Consequences implication Sustainable Above Corporate yes yes yes yes competitive Average Culture advantage return Temporary AboveTechnology & yes yes yes no competitive Average to Innovation advantage average return Temporary Above Operational yes yes no no competitive Average to advantage average return Temporary Above Low cost yes yes yes no competitive Average to structure advantage average return
    15. 15. Corporate Mission
    16. 16. Philosophy
    17. 17. Nucor Corporate Culture1. Safety2. Eliminating Hierarchy3. Trust & Freedom4. Stake in the company5. Decision Making6. Work ethic7. Employee Relation
    18. 18. Corporate Succees Factor Employee Relationship Organizational Work Ethic structuralCompensation & benefit Corporate system Technological success
    19. 19. Value Chain Analysis
    20. 20. Main Activities • Monitoring system of each plant’s schedule to function JIT inventory mode Inbound • All new mills were built on large enough tracts of land to accommodate collaborating businesses. Logistics • The ownership in Novosteel S.A help Nucor to improve its ability on logistic support, material handling, quality certifications, and schedule management functions. • The company’s hallmarks were continuous innovation, modern equipment, individualized customer service, and a commitment to producing high-quality steel and steel products at competitive prices.Operations • Construction of efficient –scale production facilities • Automated Production • Nucor located its diverse facilities in rural areas across the US • capitalize on its high quality labor force • Implementation of Mini Mills and Castrip Technology • The acquisition of DJJ give Nucor more railcars toOutbound deliver orders • Mini-mills were originally designed in part to bring theLogistics steel closer to the customer
    21. 21. Main Activities (cont’d) • Each division/plant is manage marketing and sales activities • Domestic markets see Nucor’s position in small towns and their ability to contribute to the community.Marketing and • Nucor have a high environment concern Sales • Nucor’s major customer segments were the construction industry (60 percent), the automotive and appliance industries, (15 percent), and the oil and gas industries (15 percent), with the remaining 10 percent divided among miscellaneous users. • Each Vulcraft plant mantained its own engineering department to help customers with design problems or specifications Service • All customers treated fairly with the same sales terms (closer is cheaper)
    22. 22. Supportive Activities • Commonly ask the equipment supplier to provide about materials information • Buy materials from independent broker who followed the market and made recomendations regarding theProcurement materials. • The company had alliances with outside parties and suppliers • Acquisition strategy (DJJ, Harris) and Joint Venture (Nextframe, Hismelt commercial plant) • Didn’t have a formal R&D department, a corporate engineering group, or a CTOTechnological • Monitoring others’ work worldwide and attracted investors who brought them new technicalDevelopment apllications at the earliest possible dates
    23. 23. Supportive Activities (cont’d) • No formal HR department Human • Proper wage and incentive structure Resource • Four principles of Employee Relations • No lay off policiesManagement • Attracts local workforces • Very flat organization, but then increase due to acquisition strategies Firm • DecentralizationInfrastructure • Cost-effective management information systems • Union-free (except in the subsidiary “Harris”)
    24. 24. Activity System
    25. 25. Unique Corporate Structure
    26. 26. Strategic Alliances Source : www.alacrastore.com
    27. 27. Vertical Strategic Alliances• 2001 - Auburn Steel Co Inc Merchant from Sumitomo Corp - acquires Itec Steel Inc• 2002 - Qualitech Steel SBQ LLC from Qualitech Steel Corp - Trico Steel Co LLC - Brimingham Steel Corp• 2003 - North Star Steel Arizona from Cargill Inc - American Iron-Plant, Convent, LA• 2004 - Slater Lemont Corp from Slater Steel Inc - Harris Steel Inc from Harris Steel Group Inc - Corus Tuscaloosa-Steelmaking from Corus Tuscalosa - Worthington-Cold Rolling Mill from Worthington Industries Inc
    28. 28. Vertical Strategic Alliances (cont’d)• 2005 - Fort Howard Steel Inc, a manufacturer of carbon and alloy cold finished bar products - Nufab Rebar LLC, (JV between Nucor Corp and Ambassador Steel Corp) acquired Lulich Steel LLC, a manufacturer of steel products - Nucor Corp acquires Marion Steel Co• 2006 - Franklin Reinforcing Steel Co - Connecticut Steel Corp - Verco Manufacturing Co-Plants from Verco Manufacturing Co• 2007 - Harris Steel Group Inc. of Canada - LMP Steel & Wire Co (pending) - Magnatrax Corp from Onex Corp - Nelson Steel Inc (pending)• 2008 - Nucor Corp acquires SHV North America Corp from SHV Holdings NV - David J Joseph Co acquires Galamba Metals Group LLC - Metal Recycling Services Inc - Duferdofin SpA from Industrial Union of Donbass - American Compressed Steel Inc from Seconday Resources Inc - Victoria Recycling LP - Ambassador Steel Corp
    29. 29. Horizontal Strategic Alliances• 1986 – JV with Yamato Kogyo to build a mill specializing in pliling, wide-flange beam, and structural shapes• 1995 – first JV with Brazil’s Companhia Siderurgica• 2000- JV Catstrip LLC (BHP and IHI)• 2002 – JV with CVRD (Brazil)• 2005 - NextFrame LP (JV between Nucor with Lennar Corporation)• 2005 - Hismelt Commercial Plant (JV with Rio Tinto Group, Mitsubishi Corporation, and Chinese steelmaker Shougang Corporation)
    30. 30. Nucor Organization Chart 2000
    31. 31. Nucor organization Chart 2009 Dan Di Micco (CEO)Lisegby CFO Bruce Glass David Joseph Rowan director env. Gunson GM Corp. Legal Rex Query italian JV Maero GM constTreas Bower VP HR Compamy affair GM Tax Frias GM Cont Eagle GM sect Feriola Lott Rutwosky EVP COO Steel business dev EVP fabr Const operation Darsey President Parrish Laxton Vul? Ver Gp EVP bar product GM bus. dev Statman EVP Beam True Harris CEO harris Nucor Yamato director metal strat Hall Wechsler Lowe President GM Intern Business EVP falt rolled prod Dev.
    32. 32. CONCLUSION AND RECOMMENDATION
    33. 33. Conclusion• Nucor has a consistent activity system.• By strengthening around its core elements in its activity system, Nucor has shown a strong commitment to its strategy.• Extraordinary strong worker relations.• Have a willingness to take risks.
    34. 34. Recommendation• To continue going global, but Nucor should consider the external factor (culture gap, local policy).• Acquisition / vertical integration its supply chain in an effort to reduce supply costs to secure domestic market.• Continue technological improvement.• Continue for strengthen their corporate culture.• Stay Focus on its key core competencies.
    35. 35. CREDITS:- http://www.nucor.com- http://www.flickr.com/photos/Alliance for American Manufacturing- http://www.flickr.com/photos/browni63- http://www.flickr.com/photos/birdyboo- http://www.flickr.com/photos/bradi- http://en.wikipedia.org/wiki/List_of_countries_by_steel_production-Gordin, Regina. 2007. Nucor Corporation: A Study on Evolution TowardStrategic Fit. Pennsylvania. Scholarly Commons-Source : www.alacrastore.com
    36. 36. Production Incentive Plan• Paid weekly bonuses based on production – Based on actual output in relation compared to expected tonnages produced – Based on group not individual performance – Expected output did not change unless there was a change the production process – If tardiness or attendance kept team from meeting goals, then no one received a bonus in the group • If you are 5 minutes late, you lose your bonus for the day • If you are 30 minutes late or absent, you lose your bonus for the week – 4 forgiveness days – Maintenance personnel were assigned to each team • No bonus paid if equipment is not operating – Supervisors were apart of bonus teams • Received same bonus as employees – Output and bonus info for each team was posted at the entrance
    37. 37. Department Manager Incentive Plan• Annual bonus received based on performance of the entire plant – Based on return on assets – A return of 25% or better was expected by the plantNon-production and Non-department Manager Incentive Plan• Bonus based on each plant’s return on assets – Includes everyone not in previous 2 plans – Every month each plant received a chart showing its return on assets on year- to-date basis • Posted in employee cafeteriaSenior Officers Incentive Plan• Based on return on stockholder’s equity above certain minimum earnings – If Nucor did poorly, then Senior Officers would only receive their base pay• Senior Officers earned less than other industry executives
    38. 38. Crude steel production (million tonnes):
    39. 39. The Incentive SystemProduction Incentive PlanDepartment Manager Incentive PlanNon-Production and Non-Department Manager Incentive PlanSenior Officers Incentive Plan

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