Nucor Marketing Strategy Analysis - Report Example

Nucor Strategy Analysis Student’s Name Student No Unit Name Word Count Executive Summary The purpose of this report is to analyze Nucor and come up with strategies that it can adopt. The report established that the company has been successful for a long time due to good management. However, it faces potential threats from an economic recession, cheap steel imports from China, domestic competition, protectionism, environmental issues, and depletion of raw materials. In particular, the dumping of cheap steel and steel products in the market has negatively affected their revenues due to reduced sales. Therefore, some countries have come up with measures to protect their home companies from foreign competition, which negatively affects the industry . Also, environmental concerns mean that it should meet the stringent regulations, which may differ from one country to another. Now more than ever, customers are choosing to transact with companies with green practices. Failure to address these issues and the others that have been mentioned may affect the operations at the firm. The most strategic issues are investing in major foreign markets and environmentally friendly practices. To avoid some of these problems in future, this report recommends that: 1. Nucor invests in the major foreign markets like China that will enable it to derive similar benefits enjoyed by their competitors such as access to raw materials. 2. The company focuses on adding value to its products. 3. The company invests in environmentally friendly practices. Only businesses that protect the environment will survive in the future. 4. The company discards old technology for the latest ones that are environmentally friendly. Nucor Strategy Analysis Introduction The Nucor Corporation is a U.S. based steel company. It is the largest producer of steel and steel products in North America (Nucor.com n.d). Nucor attributes its success to various factors like employee relations and satisfaction, efficiency in productivity, quality product, and aggressive pursuit of innovation and technical excellence. External Analysis and Market-Based View PESTEL Analysis External business environment plays a major role in determining the success of business. Like other firms, Nucor is affected by political, social, economic, technological, and legal factors. Economic factors present a challenge to the company as many global companies are dumping their steel products in the U.S., which reduces profits. Mainly, the rise of China in the steel industry is already affecting the business (Thompsons, n.d, p. 212). Some of the economic challenges likely to affect the business over the next decade include a rising and volatile steel price, overcapacity, shortages of input, inflation in China, and stagnation in advanced economies. Political factors refer to government interventions in the economy (Porter n.d.). Most countries are moving to protect their businesses against foreign competition (Whalley 2013). This may affect the company since it exports most of its products to international markets. The steel industry for a long time has been a focus of environmental regulators and citizen groups as well. New laws meant to protect the environment may affect the business operations as it may be forced to comply or risk losing its license (Seierstad and Harsen, 2016, p. 222). The industry is significantly affected by changes in technology. De Loecker and Collard-Wexler (2016) say that process innovation rather than introducing new products in the market solely drive increased growth in the steel industry. One of the major social factors likely to affect the business is the increasing ecological awareness among the population. A majority of people and businesses are choosing to trade with enterprises that have environmentally friendly practices (Bansal and Hoffman, 2014, p. 20). It is therefore prudent that businesses align or conform to societal expectations. Nucor would be required to come up with solutions to the threats and take advantage of the opportunities. One of the main threats that is affecting the business is the volatility of prices due to price fluctuations and the importation of cheap steal productions from overseas market (Nucor.com n.d). However, the business stands to benefit out of its huge investment in the latest technology in their manufacturing process. The company’s future success will be determined by technology innovation. The use of innovative manufacturing process has enabled it to produce high-quality goods cheaply compared to their competitors who still use traditional means of production (Thompsons, n.d, p. 229) (Appendix 5). The business can take this advantage by lowering the prices of its commodities. Its decision to invest in environmental practices may work to its advantage since people are becoming increasingly aware of their environment and choose green products. Therefore, it should capitalize on this through highlighting it on advertisements. To defeat protectionism, the company should continue entering into strategic partnership with other global companies. Already, it has entered into many joint ventures with other steelmaking companies in Mexico, Brazil, the Middle East, Colombia, and Asia (Appendix 1). Market Dynamics Several factors affect the development of the steel industry. These factors include globalization and concentration of steel producers, increased global protection due to the removal of trade barriers, and the tightening of environmental laws on emissions (OECD 2009). The main driving forces in the industry include raw materials, products, costs, and people. Due to diminishing raw materials, steel companies are obliged to look for readily available inputs such as iron ore fines. Similarly, they are required to apply innovative process technologies that reduce emissions and wastes. They also have to adopt advanced recycling solutions that turn wastes into valuable products to meet the more stringent environmental laws in the industry. Another paradigm shift in this industry is that companies are becoming more value-enhancement oriented and less technology focused. More than ever, producers are focusing on improving the quality and value of their commodities as witnessed by the creation of modern and ultra-high-strength products. To maintain and expand their existing markets, companies would be required to create high steel grades. TRIP (Transformation Induced Plasticity) and TWIP (Twinning-Induced Plasticity) steels are some of the new grades for the special application (Metals and Mining, 2006). Producers are putting more effort to elongate the value-added chain in production via the increased installation of downstream facilities such as galvanizing and coating lines as well as the manufacturing of tailored banks and auto-body parts. Specifically, the improvement of product quality is only possible through the installation of fully automated steel plants that start with the processing of raw materials up to the transportation of the finished products. Cost is another driving force. A majority of steel manufacturers are focusing on reducing the cost of production to increase their revenues. To achieve this, most of them are improving their business processes through coming up with better investment strategies and implementing best practices (Metals and Mining 2006). Other measures undertaken include the application of knowledge management tools and the maximum adoption of automation systems that help reduce costs and maximize profits. The last key driving force is people. It is important to know that qualified and motivated personnel play a key role in the success of a company. In this industry, issues of job safety, vocational training, health, and work environment are becoming increasingly important for the success of companies (Metals and Mining 2006). For example, steel companies are fully automating dangerous working areas and making continual improvements in their plant operations and productions. Employees are motivated through employing modern idea management systems that help to exploit their vast creativity. These factors are all important to Nucor both now and in future. First, the company needs to continually look for both cheaper and readily available raw materials that will enable it to meet its market demand. Moreover, it ought to ensure that they are harnessed in environmentally friendly practices that are in line with the existing environmental laws (Metals and Mining 2006). Secondly, it should focus on reducing the cost of doing business to remain competitive in the industry. This should be achieved both presently and in future. Lastly, it should invest in people management strategies that will enable it to manage its employees well for maximum output. This encompasses training and rewarding them. Most of these factors are controllable. For example, the company can devise ways to add value to its products by creating high-quality grades. Likewise, it can improve the quality of its workforce through adopting the right management techniques. The cost of doing business is partly controllable and slightly uncontrollable (Metals and Mining 2006). Whereas the business can reduce the cost of business through efficient production, they may be unable to control external factors that push it up. The forces also vary on a number of aspects. Some of them are dynamic while others are static. Whereas raw materials are static, cost, and people are dynamic are they are characterized by constant changes. In addition, they may also offer a threat or opportunity to business. Lack of raw materials, for example, could lead to small production and the inability of the firm to meet customers’ needs (Metals and Mining 2006). They may also affect the five forces of the industry that are the power of customers, the power of suppliers, the threat of market entry, and the threat from substitutes. For instance, the decrease in production costs could reduce commodity prices thereby increasing customers’ purchasing power. High profits could also weaken suppliers, ensure high entry barriers, offer little rivalry, and ensure that there are few opportunities for substitutes. Nucor can come up with some measures to position itself on the right side of these forces. Firstly, it needs to focus on providing quality-improved products. Secondly, it should concentrate on minimizing the cost through efficient management. Lastly, it should ensure that its employees remain highly motivated and skilled through rewarding and training them. Customers Bargaining Power The firm produces an array of products that it sells directly to individuals and big companies. Some of these products include steel bars, sheet steel, farm machinery, anchor bolts, conditioners compressors, electric motors, lawn mowers, and hydraulic cylinders (Day 2012) (Appendix 3). It sells some of these products directly to large buyers in the vehicle, agriculture, hydraulic, and electric motor industries. It also sells to steel service centers that in turn supply manufacturers that need smaller amounts. Most of the company sales are made to external customers. For example, in 2012 and 2013, approximately 86% of the steel shipped went to external clients. According to a 2016 report, the company’s chief customers were those from the construction and mining industry, the manufacturing industry, and steel service centers (Csimarket.com, 2016). The company has a huge potential of increasing its market share in foreign market. There are specific segments that realized more growth than others did in 2016. The 2016 Nucor Revenue Growth report revealed that there was an increase in revenue in the forestry and rubber industry by 29.72%, iron and steel industry by 8.62%, conglomerates industry 36.3%, track and manufacture and industry 12.5% (Nucor n.d.). Others that also realized growths include oil gas and integrated, auto truck and parts industry, auto and truck manufacturers industry, professional services industry, communications and equipment industry, railroad’s industry, marine transportation industry, electric utilities industry and natural gas utilities industry (Appendix 4). The company has a chance to increase its market share in various segments that it is doing poorly. Some of these include chemical manufacturing sector, metal mining industry, aerospace and defense sector, appliance and tool industry, oil and gas production, miscellaneous manufacturing sector, and electrical and wiring industry among others Intensity of Industry Competition Nucor faces competition from both domestic and external companies. In 2014, it was ranked the 14th largest company in the world based on its production capacity of 27 million tons. The company’s primary competitor in the U.S. is the US Steel (Thompsons, n.d, p. 212). The US Steel targets the same market as Nucor that are the appliance, automotive, construction, energy, and service centers (Ussteel.com, n.d.). Some of its products include sheet, tin, and tubular. The companies in the steel industry compete through the product quality and cost. Those that can produce quality products at lower prices have a significant advantage over those that do not. The industry is very competitive due to a liberalized market where international companies are free to export their products to other countries at lower prices. Particularly, Asia steel companies continue to be blamed for dumping excess product on the international market at lowball prices (Pooler, 2016). Internal Analysis and Resource Based View Resource Analysis Nucor has invested heavily in both physical and intangible resources. For instance, it has acquired some steel companies in the United States (Appendix 2). Also, part of its strategy is to continue to be a pacesetter in technology and to develop new facilities capacities. The acquired facilities are then upgraded to meet the required standards (Appendix 7). It became been an early investor in disruptive and leapfrog technological innovations. The former are production processes and equipment that enables it to have a leading market advantage and thus be disruptive to the effort of their rivals in matching its product quality and competitiveness (Thompsons, n.d, p. 229). The latter refers to processes and tools that would enable it to outdo its rivals about cost per ton, product quality, and market share. The company continues to be a leader in technological innovations with the recent being the Castrip process which it commercialized (Appendix 6). The process has a potential to produce 850,000 tons of unique quality steels. It has also ensured that it attracts and retains the most qualified personnel. Specifically, it has put into place effective measures that ensure that its employees are highly motivated. For example, the company provides incentives to motivate employees to work hard. The employee turnover at the firm is extremely low whereas it continues to receive an avalanche of job applications anytime a vacancy is announced (Thompsons, n.d, p. 235). This is only possible because the company enjoys a good reputation in the society. Besides, it adopted an egalitarian approach of offering fringe benefits to its staff. They were provided with the similar insurance programs, vacation plans, and holidays as those of senior managers. Organizational Analysis and Organisation Based View Mission and Objectives The organization’s mission is to take care of their customers. They are able to achieve this through being the providing safe working environment, offering highest quality goods at the lowest cost, and being the productive and most profitable steel firm in the world. It says that it is committed to accomplishing all that while still being cultural and environmental stewards in the community (Nucor.com. n.d.). This mission is relatively stable as it enables the company to achieve its objectives under different economic situations. The company's primary goal is to continually improve its capability to take care of all its customers, the individuals who purchase their products, its teammates, and its shareholders. Moreover, its financial level objectives are consistent with the mission so, thus, eliminating any conflict of interest. Corporate Analysis Internationalisation Analysis The company sells its products both to the host market and exports to foreign countries. The United States exported at least 6 million metric tons in 2016. The largest share went to Canada, which accounted for the 51% followed by Mexico at 39% (Appendix 5). The other countries include Indian, China, Brazil, and Belgium, which received 1% of the countries steel exports in the same year (Global Steel Trade Monitor, 2017). The top steel producers that accounted for a larger share of this exploits include Nucor Corporation, which produced 19.6 mmt, United States Steel Corp 14.5 mmt. ArcelorMittal USA 13.9mmt, Gerdau North America, Steel Dynamics Inc, AK Steel Corporation, Severstal North America and Commercial Metals Co. The company faces competition from leading steel enterprises of the U.S. and other foreign companies that are majorly based in China. The company should target or seek to increase its market share in emerging markets in India, Venezuela, China, South Korea, and Vietnam among others (Recycling International, 2015). Identification of Key Strategic Issues Nucor does not face major strategic issues. In fact, the company has made profits in every quarter of every year since 1966 apart from the last three-quarters in 2009 and quarter in 2010 due to an economic slump. This is a rare accomplishment given that other industry players have been posting mixed results. The major issues affecting the business include competition from foreign businesses, protectionism, raw material challenges, and environmental protection Future Strategic Options To secure itself, the company needs to come up with some future strategic options. First, it needs to find a way of dealing with the importation of cheap steal productions from the overseas market that affects its revenue. Particularly, this will only be possible through cost-reducing measures and efficient manufacturing process. Secondly, it needs to find a way of dealing with protectionism, the company by entering into strategic partnership with other global companies. Thirdly, the company needs to ensure that its processes are environmentally friendly. Apart from meeting the necessary environment laws requirements, the company should initiate its actions that will help it cut down on hazardous wastes (Thompsons, n.d, p. 234). Also, they have to come up with efficient recycling processes to reduce the waste. Fourthly, it should place emphasis on improving the quality of its products through value addition since the market is more receptive to such products. Lastly, the success of the company will be determined by the quality and motivation levels of its employees. It, therefore, needs to come up with plans for their training and development and more effective ways of motivation. Strategy Evaluation and Selection Failure to deal with the mentioned issues will threaten the stability of the business. Effective measures can be used to handle cheap importations by making their products less costly through reducing costs in production that are passed to the end user. Another way to stop this is by focusing on producing quality products. Arguably, most customers prefer superior products to those that are less superior. Another important thing that cannot be pushed aside is the environment issue. Moreover, consumers are more aware of the environment, and failure to adopt green practices can spell doom for a company. The company will derive numerous benefits from being a leader in the prudent use of natural resources and leaving less harm to nature. Finally, companies with well-trained and motivated staff generally perform better over their competitors. Justification of Recommendations and Action Plan Based on the analysis, the following recommendations can be made: 1. Nucor deals with cheap importation by investing in the main foreign markets like China that will enable it to derive similar benefits enjoyed by their competitors such as access to raw materials. 2. The company focuses on adding value to its products. 3. The company invests in environmentally friendly practices. Only businesses that protect the environment will survive in future. 4. The company adopts energy friendly practice SAF Criteria Strategy 1 SAF Criteria Dealing with the importation of cheap products from foreign markets. Nucor currently faces competition from foreign companies that import cheap products. Yes/No Suitability Finding a solution to cheap foreign products meets the demand of products of buying products that cost less and are of high quality. It also presents Nucor with an opportunity to deal with competition. Yes Acceptability This strategic option has a higher level of acceptability and is widely used in different industries. Thus, it is likely to be accepted by shareholders. Also, the risk associated with this strategy is small. On the other hand, it would be riskier if the company fails to secure its future against cheap imports. Implementation of this plan could see the company reduce cost of doing business and increase its revenues. Yes Feasibility The proposed strategy is workable. Nucor should set aside the necessary resources to upgrade its facilities and train its employees on new technologies that are cost efficient. Since it has the funds, the company should consider this a priority. Yes SAF Criteria Strategy 2 SAF Criteria Adding value to its products. Yes/No Suitability Adding value to its products will help Nucor sustain the competition from other industry players. Currently, the company faces stiff competition from value added steel products in the market. Yes Acceptability Yes Feasibility The proposed meets the stakeholders expectations of a successful company. Arguably, this is possible through having superior in the market. Having better products would put the company in a better position in the market and would result in higher revenues. The stakeholders definitely would accept this proposal. Yes SAF Criteria Strategy 3 SAF Criteria Nucor invests in environmentally friendly practices Yes/No Suitability Investing in environmentally friendly practices is in line with the trends requiring companies to be more responsible to the environment. The main challenge is that different countries and jurisdictions have different environmental requirements that may be difficult to implement. Yes Acceptability This proposed strategy would be gladly welcomed the Nucor’s shareholders. Moreover, companies with green practices have a better reputation with the public and tend to do well. Yes Feasibility Green energy practices basically means activities that leave less damage to the environment. Nucor can adopt some of them such as clean energy. The company can seek the services of experts to help it implement this strategy. They can also work with environmental regulators. Yes SAF Criteria Strategy 4 SAF Criteria Adopts energy friendly practices Yes/No Suitability Adding value to its products will help Nucor use clean energy Currently, the company the company relies on coal and electricity for its production Yes Acceptability Yes Feasibility The proposed meets the stakeholders need to save on expenses for increased profits. Yes Action Plans The most important strategic points for Nucor would be to: 1. Invest in the main foreign markets like China that will enable it to derive similar benefits enjoyed by their competitors such as access to raw materials. Besides, expansion into new markets will help it spread the risk of doing business. 2. Invests in environmentally friendly practices: this is not only limited to energy but buildings and other day to day activities Action Plan for Investing in Foreign Market Breakdown Analysis Timeframe Medium Strategic + How the strategy solves them Finding a solution to dealing with the importation of cheap steal productions from the overseas market that affects its revenue. Introducing cost-reducing measures Efficient manufacturing process. Cost reducing measures will push down the cost of production making their products much cheaper. Efficient manufacturing process will reduce waste hence make production cheaper and faster. Justification Dealing with cheaper imports poses a greater opportunity for the company to improve its market share. Currently, China steel companies are doing much better due to their cheap foreign steel exports. Financial Requirement Large Initial Requirements Change of production facilities to adopt more recent ones Cutting down on redundancies Action Plan 0.1 year: identification of proper manufacturing systems that are cost efficient 1-2 years: setting up of the modern manufacturing systems Potential Limitations Upgrades could cut production especially during the installation of the new systems. The costs could be high Training of employees to operate the new machines will be required. Action Plan for Investing In Environmentally Friendly Practice Breakdown Analysis Timeframe Long-term Strategic + How the strategy solves them Adopting environmentally friendly practices Justification Places the company in line with the latest consumer trends. Enables the company to meet the different environment regulations around the world. Makes the company more responsible towards the environment. Gives the company a good image among the public and stakeholders. Financial Requirement Large Initial Requirements Seeking the services of environment experts to give a report on changes to be made with regard to safeguarding the environment. Action Plan 0.2 months: finding a suitable company that could advice it on energy friendly practices and implement the recommendations. 2-4 months: train management and staff on the new environment friendly practices. 4 months – continue upgrading environmentally practices as new demands keep cropping up. Potential Limitations It can be expensive adopting the ever changing demands by environment agencies. References List Csimarket.com., 2016. Nucor Customers by Division and Industry. [online] Available at: http://csimarket.com/stocks/markets_glance.php?code=NUE [Accessed 8 Mar. 2017]. Bansal, P. and Hoffman, A. (2014). The Oxford handbook of business and the natural environment. Oxford: Oxford University Press. Day, M. (2012). Nucor looking to ventures for international growth. [online] MarketWatch. Available at: http://www.marketwatch.com/story/nucor-looking-to-ventures-for-international-growth-2011-06-22 [Accessed 9 Mar. 2017]. De Loecker, J. and Collard-Wexler, A., 2016. The productivity impact of new technology: evidence from the US steel industry. [online] Microeconomic Insights. Available at: http://microeconomicinsights.org/productivity-impact-new-technology-evidence-us-steel-industry/ [Accessed 7 Mar. 2017]. Global Steel Trade Monitor., 2016. [ebook] International Trade Adminstration. Available at: http://www.trade.gov/steel/countries/pdfs/exports-us.pdf [Accessed 9 Mar. 2017]. Indeed., n.d.. Nucor Employee Reviews. [online] Available at: https://www.indeed.com/cmp/Nucor/reviews [Accessed 9 Mar. 2017]. Metals and Mining., 2006. Siemens Vai. [online] Available at: https://www.primetals.com/en/pressandmedia/archive-metals-magazine/Documents/001_Metals-Magazine-2006_Driving-Forces-of-Steel-Industry.pdf [Accessed 8 Mar. 2017]. Nucor.com., n.d.. Nucor Corporation. [online] Available at: http://www.nucor.com/story/mission/ [Accessed 8 Mar. 2017]. Pooler, M., 2016. US steel industry expected to return to growth. [online] Ft.com. Available at: https://www.ft.com/content/1522243c-c93e-11e6-8f29-9445cac8966f [Accessed 8 Mar. 2017]. Porter, M., n.d.. How Competitive Forces Shape Strategy. [online] Harvard Business Review. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy [Accessed 8 Mar. 2017]. OECD., 2009. Presentation for the Council Working Party on Shipbuilding. [ebook] OECD. Available at: https://www.oecd.org/sti/ind/43312347.pdf [Accessed 9 Mar. 2017]. Ussteel.com., n.d.. Doing Business. [online] Available at: https://www.ussteel.com/uss/portal/home/doingbusiness/customers [Accessed 8 Mar. 2017]. Recycling International., 2015. New phase' emerging for steel markets. [online] Available at: http://www.recyclinginternational.com/recycling-news/8810/ferrous-metals/global/039-new-phase-039-emerging-steel-markets [Accessed 9 Mar. 2017]. Seierstad, C. and Harsen, K. (2016). Corporate Social Responsibility and Diversity Management. 1st ed. London: Springer. Thompsons, A. (n.d.). Nucor Corporation in 2014: Combating Low-Cost Foreign Imports and Depressed Market Demand for Steel Products. 1st ed. The University of Alabama. Whalley, J. (2013). China's trade, exchange rate and industrial policy structure. 1st ed. Singapore: World Scientific Publishing Company. Appendix 1 Companies that Nucor has acquired and entered into partnerships Yamoto-Kogyo South Land Tube JFE Holdings Plate Mill Texas Joy Global Inc The Longview Mill Marion Steel Birmingham Steel Mill Duferco Group Corus Tuscaloosa Appendix 2 Nucor Strategic Acquisitions In 2001, Nucor paid $115 million to buy nearly all shares of the Auburn Steel Company’s 400,000 ton steel bar factory in Auburn, New york. This enabled it to increase its market visibility in the Northeast. It was also viewed as a good supply for a new Vulcraft joist facility being built in Chemung, New York. Nucor acquired ITEC Steel Inc for $9 million in November 2001. It was impressed by the company’s dedication in improving its products line and geographical market. In July 2002, the company acquired Trico Steel Company for $ 120 million. Trico Steel Company had a 2.2 million steel mill in Decatur, Alabama. In December 2002, it purchased Birmingham Steel Corporation that consisted of four ball mills in Alabama, Washington, Mississippi, and Illinois. Combined, these mills had an ability of producing nearly 2 million tons in a year. The deal also included the purchases of the assets of Port Everglade Steel Corp, the assets of Klean Steel and Birmingham Steel ownership interest in Richmond Steel Recycling. In 2006, it bought Connecticut Steel Corporation. The deal cost $43 million for the company that had an yearly capacity of 300,000 tons of wire rod and rebar. In the same year, it purchased Verco Manufacturers. Co for approximately $180 million. This helped it solidify its position as the leading steel decking company. In 2007, it acquired Canada-based harris Steel for $1.07 billion. The company focused on fabrication and placement concrete reinforcing steel and the design and installation of concerete post-tensioning system. In the same year it bought South Pacific Steel Corporation, Consolidated Rebar Inc and a 90% stake in Barker Steel Corporation. Equally, at the close of that year it bought LMP Steel and Wire Company, Nelson Steel, and Magnatrax Corporation. In 2008 through its subsidiary Harris Steel, it acquired Ambassador Steel Corporation at a price of $185.1 million. The company was one of the largest independent fabricators and distributors of concrete reinforcing steel. Subsequently, in 2009 it acquired Free State Steel. In 2012, Nucor purchased Steel LLC for approximately $675.4 million. Appendix 3 List of Products that Nucor Produces Carbon Steel Wire Rod Grating SBQ steel Bars Sheet and Plate Bar and Structural Drawn Wire Cold Finish Steel Bars Engineered bars Cioled Rebar Fasteners Structural Nuts Hex Head Cap Screws Structural Bolts Hex Flange Bolts Finished Hex Nuts Alloy Steel Cold Finish Steel Bars SBQ Steel Bars Hex Head Cap Strews Finished Hex Nuts Structural Nuts Steel Products Roof Deck Joist Girders Rebar Fabrication Tube Composite Floor Joist Metal Building Systems Signposts and Barrier Systems Raw Materials Direct Reduced iron Ferrous Scrap Brokerage Direct Reduced iron Ferro Alloy Brokage Mill Services Non Ferrous Scrap Brokage SDS By Product Sheet Wire Cold Finish Joists Plate SBQ Sheet Wire Deck Fasteners Appendix 4 Nucor markets Transport On-highway trucks rail Cars barges ship Construction Energy Automotive Heavy Equipment Appendix 5 Pricing and Sales Between 2012 and 2016, approximately 86% of the steel shipped from Nucor’s steel mills went to external customers. The prices of the commodities sold were determined by market-demand supply conditions that were dynamic. Most often, they would bounce weekly or a daily basis. Therefore, the company had to devise a strategy to protect itself against this. It adopted a new pricing strategy that charged customers the price on the day that that they place an order. The company marketed its products through an in-house sales team that were located in all its production capacity. The company sold steel joists, joist girders, and deck based on firm, fixed contracts that were often won in competitive bidding. They also negotiated long-term supply contracts with customers that allowed for price changes to reflect changes in raw materials costs. Appendix 6 Steelmaking Technologies adopted by Nucor The company has heavily invested in two types of technologies that are disruptive and leapfrog technological innovations. The former refers to production processes and tools that make it possible for it to derive market advantage. Additionally, it has been pioneering the Castrip technology, which it has already commercialized it. The technology is used for producing flat-rolled, carbon, and stainless steels in extra thin gauges. It uses very few process steps to cast metal at customer desired thickness and shapes. This technology is particularly significant to the company has it enabled it to reduce capital outlays for equipment and produced savings on operating expenses as well. More importantly, it helped cut greenhouse gas emissions by up to 80%. Appendix 7 Low Cost Production Nucor strives to improve efficiency and lower production costs in all its plants. It is able to achieve this through building state-of-the art facilities and improving them via modernizations. Its management makes sure that they incorporate the latest advances in steelmaking around the world in their facilities. They also continue to search for emerging cost-effective technologies it could use or adapt in its plants. For a long time, the company has had an outstanding commitment to ensuring that its workforce have the best technology to enable them perform their jobs perfectly and safely. For example, it makes sure that all the acquired plants meet its standards through what is known as “Nucorizing”. This includes increasing operational efficiency by reducing the labor, space, energy, and time it takes to produce steel while paying close attention to safety and environmental protection practices. Read More