Nucor Corporation Case Essay

Summary: For more than 20 years the Nucor Corporation has been one of the leading manufacturers of steel and steel related products in the world. With their technology advancement, low debt ratio, decentralized type of organization and many more, this company still thrives to achieve better goals in their company. Aside from the positive views of the company, it also faced problems like bankruptcy. (te pakidagdagan n lng) History: Nucor traced its origins to auto manufacturer Ransom E. Olds, who founded Oldsmobile, and later, Reo Motor Cars. Through a series of transactions, the company eventually became the Nuclear Corporation of America, a company involved in the nuclear instrument and electronics business. In 1972, the firm changed its name to Nucor Corporation. By 1998, it had become America’s second-largest steel maker. Operations: Nucor related its diverse facilities in rural areas across the United States, establishing strong ties to its local communities and its work force. As a leading employer with the ability to pay top wages, it attracted hard-working, dedicated employees. These factors also allowed Nucor to select from among competing locales, siting its operations in states with tax structures that encouraged business growth and regulatory policies that favored the company’s commitment to remaining union-free. By mid-2008, Nucor operated 53 facilities throughout the United States and one in Point Lisas, Trinidad. The company also maintained operations through wholly owned subsidiaries, Harris Steel and the David J. Joseph Company (DJJ). Strategy: Nucor’s strategy focused on two major competencies: building steel manufacturing facilities economically and operating them productively. Organization Structure: Compared to the typical Fortune 500 company with 10 or more management layers, Nucor’s Structure was decentralized, with only the four management  layers illustrated below: Chairman / Vice Chairman / President Vice President / Plant General Manager Department Manager Supervisor Human Resource Policies: Employee relations at Nucor were based on four principles: 1. Management is obligated to manage Nucor in such a way that employee will have the opportunity to earn according to their productivity. 2. Employees should feel confident that if they do their jobs properly, they will have a job tomorrow. 3. Employees have the right to be treated fairly. 4. Employees must have an avenue of appeal when they believe they are being treated unfairly. Compensation: Nucor provided employees with a performance-related compensation system. All employees were covered under one of four compensation plan, each featuring incentives for meeting specific goals and targets. 1. Production Incentive Plan * employees directly involved in manufacturing were paid weekly bonuses based on actual output in relation to anticipated production tonnages produced. The bonuses were paid only for work that met the quality standards and were pegged to work group, rather than individual output. 2. Department Manager Incentive Plan * Department managers earned an annual incentive bonus based on the performance of the entire plan to which they belonged. The targeted performance criterion here was return on assets. 3. Non-Production and Non-Department Manager Incentive Plan * All employees not in the Production Incentive Plan or Department Manager Incentive Plan – including accountants, engineers, secretaries, clerks, and receptionists – received a bonus based primarily on each plant’s return on assets. It could total over 25% of an employee’s base salary. 4. Senior Officers Incentive Plan * Included all corporate executives and plant general managers. A portion of pre-tax earnings was placed into a pool that was divided among the officers. If Nucor did well, the officers’ bonuses, in the form of stock (about 60%) and cash (about 40%), could amount to several times their base salaries. If Nucor did poorly, an officer’s compensation was only base salary and, therefore, significantly below the average pay for this level of responsibility. Information Systems: Benefits: Nucor took an egalitarian approach toward employee benefits. Nucor’s benefit program also attested to the company’s commitment to education. Technology: Nucor did not have a formal R&D department, a corporate engineering group, or a chief technology officer. Instead, it relied on equipment suppliers and other companies to do the R&D, and they adopted the technological advancements they developed – whether in steel or iron making, or in fabrication. Teams composed of mangers, engineers, and machine operators decided what technology to adopt. Future: The company’s biggest challenge (in the future) is to continue to grow the company at 15 – 20% per year, and to keep earnings parallel with its growth. Analysis: Nucor Corporation became one of the top corporations in the steel industry because of their handwork and technology innovation. This company also sees and takes care of its employee’s needs, which in return gives them  a quality service in their work. Conclusion: Nucor, even though we can see it as a successful, almost perfect company, still faces problems like other businesses in the industry. Problem: The company has lost one-third to one-half of its market value when the stock reached its peak value (mid-2008), and has not recovered as of 2012. Recommendation: We can recommend change in the company’s technology, like getting more advance equipments in making steel and steel-related products. Or the company could make a merger to other company to utilize its resources to its maximum while keeping cost low.