Nucor Corp. CEO Dan DiMicco doesn't want his workers to sit silent anymore. The outspoken critic of U.S. trade policy with China addressed a letter in March to all employees asking them to write their elected officials and voice their support for legislation that would address currency manipulation and other illegal trade practices by China.
The company, one of IndustryWeek's 50 Best Manufacturers for 2007, has reason to be concerned. In July, Nucor reported that second-quarter profit dropped 23%, citing high imports of Chinese steel as a contributing factor. The Charlotte, N.C.-based company also attributes the decline to slowdowns in the automotive, appliance and housing sectors.
Net earnings fell to $344.9 million, or $1.14 per share, compared with $450 million, or $1.44 per share, during the year-earlier period. Steel shipments in the first half of 2007 totaled 11.1 million tons, a decrease of 5% over the previous year.
In addition to currency manipulation, DiMicco cited in his letter dated March 20, 2007, China's lack of greenhouse gas emissions standards and government subsidies to Chinese steel producers as unfair trade practices that hinder the U.S. steel industry. He added, "At Nucor we must face the cold, hard fact that our own government is not doing enough to correct the situation. But if our own government does not hear from us - if we are silent - then we should not expect it to change things for the better."
DiMicco encouraged employees to reference in their letters to representatives bills:
- H.R. 1229 -- the Nonmarket Economy Trade Act of 2007 -- applies U.S. antisubsidy law to nonmarket economies, including China
- H.R. 782/S. 796 -- the Fair Currency Act of 2007 -- would classify currency manipulation as an illegal subsidy
- S. 364 -- Strengthening America's Trade Laws Act - gives Congress more authority to respond to World Trade Organization decisions that adversely affect the United States
DiMicco included a form letter with his correspondence to employees that they can simply sign and insert the appropriate representative name and address.
At A Glance
Primary Industry: Primary metals
Number of Employees: 11,900
2006 In Review
Revenue: $14.8 billion
Profit Margin: 11.92%
Sales Turnover: 1.87
Inventory Turnover: 10.82
Revenue Growth: 16.14%
Return On Assets: 24.62%
Return On Equity: 41.07%
Meanwhile, Nucor has been busy in 2007 purchasing other companies. On Aug. 2, the company said it acquired cold finished bar producer LMP Steel & Wire Co. for $28 million. LMP has a production capacity of about 100,000 tons and employs 155 workers. The acquisition bolsters Nucor's North American position in the cold finished steel market, according to DiMicco.
"The acquisition of LMP is a solid growth opportunity for one of our core downstream businesses," said DiMicco when the deal was announced. "LMP's highly complementary product offering and operations will be a good fit with our existing cold finish business."
Earlier in the summer, Nucor acquired Magnatrax Corp., a producer of custom-engineered metal building systems for the North American non-residential construction market, for $280 million. Magnatrax will merge with a subsidiary of Nucor. The deal is expected to close during the third quarter.
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