Nucor Corp.: Fresh Approach To Old Industry

April 25, 2006
North Carolina-based steel maker aims for younger generation.

Competition is only half the battle for manufacturers. The other half is reinventing manufacturing's appeal to the next wave of workers. Indeed, "The image of manufacturing is unattractive to younger generations," says Suzanne Miklos, CEO of Cleveland-based Organizational Effectiveness Strategies, a consultancy that links business strategies with people strategies.

For Nucor Corp., one of IndustryWeek's IW Best 50 Manufacturers for 2005, trying to entice younger workers into its steel plants has led it on a grass roots advertising campaign aimed at showing the hip side of being a steel maker.

In one ad, Nucor explains "Why kids want to be in the steel business when they grow up."

According to Nucor, "as any self-respecting kid knows, Nucor is a favorite of Fortune and Forbes, annually making their lists of America's top companies. Ranking us right up there as a career choice with astronaut, fireman and cowboy."

It seems that Nucor is trying to uphold its boastful statements in its latest earnings report.

Consolidated earnings for the first quarter of 2006 increased 7% to $379.2 million over first-quarter 2005 and consolidated net sales also increased 7% to $3.55 billion during the same period, according to an April 20 press release.

Nucor Corp.
At A Glance

Nucor Corp.
Charlotte, N.C.
Primary Industry: Primary metals
Number of employees: 11,300
2004 In Review
Revenue: $11.4 billion
Profit Margin: 9.9%
Sales Turnover: 1.9
Inventory Turnover: 10.1
Revenue Growth: 81.6%
Return On Assets: 25.0%
Return On Equity: 47.9%
The Charlotte, N.C.-based company also increased steel production by 13% in first-quarter 2006 compared with first-quarter 2005 -- from 5.1 million tons to 5.8 million tons. In the steel products segment, steel joist production during the first quarter was 139,000 tons compared with 123,000 tons for the same quarter in 2005. Steel deck sales increased 6% from 80,000 tons in first-quarter 2005 to 85,000 tons in this year's first quarter. Cold-finished steel sales increased 8% to a record 96,000 tons, compared with 89,000 tons in the first quarter of 2005.

Nucor also seems to be standing behind its ad, "How our steel cleans up after itself."

According to a March 28 press release, Dan DiMicco, Nucor's vice chairman, president and CEO, urged Congress to pass legislation to allow more production of natural gas and to expedite liquid natural gas site approvals.

Describing how Nucor has to compete with foreign steelmakers with access to much lower-cost natural gas, DiMicco stated, "In 2005 there were times when Nucor was paying three to five times as much for natural gas as some of our foreign competitors." He noted that higher natural gas prices cost U.S. iron and steel producers an extra $1 billion last year.

The CEO cautioned that additional natural gas supplies would not be enough. "We need both more gas supply and more efficient use of gas. We also need to fully utilize new and safer technology to generate electricity including alternative energy, clean coal and nuclear."

He emphasized how serious Nucor is about improving its efficiency in the use of gas. "In 1987 we literally bet the company on trying to perfect an unproven, revolutionary technology called 'thin slab casting.' That effort paid off with a technology now used by Nucor domestically and others around the world that uses only a third of the natural gas normally used to make sheet steel."

DiMicco revealed that his company has an even more efficient Castrip technology that "leapfrogs both conventional and thin-slab sheet production by eliminating the need for the natural-gas-fired reheat furnace and slashing the electricity needed for rolling." Nevertheless, he warned, "We will still need gas for decades to come."

In describing the technology that Nucor is pursuing to reduce its natural gas consumption and improve the efficiency of steel production, DiMicco said, "Nucor is doing its part. Now Congress and the administration need to do their part."

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