Nucor In 2005

Case #18: Nucor in 2005

Company background
Nucor history dates back to 1955, when merger of various businesses created company Nuclear Corp. of America. During post-war years the company was in various ‘high-tech’ businesses like radiation sensors, semi-conductors, air-conditioners. However, after facing deep financial problems, it was decided to get rid of unprofitable ‘high-tech’ divisions and concentrate on steel joist and steel production business. By 1984, Nucor had 6 joist plants and four steel mills.

Growth
After 20 years of operations in steel business, Nucor has become the 2nd largest U.S. steel company. Net sales increased from USD 4.8 bln. in 2000 to USD 11.4 bln. in 2004, with respective increase in net income from USD 311 mio. to USD 1.1 bln. Key financial ratios for 2004 indicate very good financial state: ROA 25%, ROE 38%, total debt to equity only 26%, asset turnover 1.85 times and inventory turnover 9.7 times per year.   Nucor was named #1 in 2005 Business Week’s top performing companies. By 2005, Nucor had 16 steel facilities, 14 bar mills with capacity of 8.4 mio tons and 4 sheet mills. Nucor had 2 joint ventures ''   one in Brazil and another in Australia.

Internal environment
On the great extent, the company’s success is based on the use of new technologies and innovations ''   it was one of the first to use new ‘minimill’ technology, computer inventory management systems and design/engineering programs. On the other hand, success is based on liberal, goal oriented management style and care for employees. Ordinary employees received motivated base salaries and weekly bonuses based on the performance.

External environment

SWOT analysis
Strengths. New technologies, cost saving, alliances with potential customers, experienced management in terms of steel production.
Weaknesses. Rather out-of-time management style in terms of control.
Opportunities. Diversification of products, geographical expansion.
Threats. Mergers of...