Nucor Corporation is the largest steel producer in the United States and had net sales of $12.7 billion in 2005. Nucor is the nation's largest recycler. In 2004, Nucor recycled approximately 17 million tons of scrap steel, with 5 million of those tons being automobiles. Nucor's origins are with auto manufacturer Ransom E. Olds, who founded Oldsmobile and then Reo Motor Cars. Through a series of transactions, the company Olds founded eventually became the Nuclear Corporation of America. Nuclear Corporation was involved in the nuclear instrument and electronics business in the 1950's and early 1960's.
The company suffered through several money-losing years, and when facing bankruptcy in 1964, installed F. Kenneth Iverson as President and Samuel Siegel as Vice President of Finance. This change in management led to a restructuring and a decision to rebuild the company around the major profitable operations; the steel joist businesses in Florence, South Carolina and Norfolk, Nebraska called Vulcraft.
The company moved its headquarters from Phoenix, Arizona to Charlotte, North Carolina in 1966, and expanded the joist business with new operations in Texas and Alabama. Management then decided to integrate backwards into steel making by building its first steel bar mill in Darlington, South Carolina in 1968. In 1972 the company adopted the name Nucor Corporation. Since that time, Nucor has built three more Vulcraft facilities, eight steel mills, and expanded into other steel products.
In 2002, Nucor completed the purchase of substantially all of the assets of Birmingham Steel Corporation, which includes four operating mills in Alabama, Illinois, Washington, and Mississippi. Today, Nucor has operating facilities in 16 states. Products produced are: carbon and alloy steel in bars, beams, sheet, and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing.
Management Philosophy
The company's success comes from its more than 11,000 employees. Nucor seeks to hire and retain highly talented and productive people. Nucor has a simple, streamlined organizational structure to allow employees to innovate and make quick decisions. The company is highly decentralized, with most day-to-day operating decisions made by the division general managers and their staff. The organizational structure at a typical division is made up of only three management layers:
Employee relations at Nucor are based on four clear-cut principles:
1. Management is obligated to manage Nucor in such a way that employees will have the opportunity to earn according to their productivity.
2. Employees should be able to feel confident that if they do their jobs properly, they will have a job tomorrow.
3. Employees have the right to be treated fairly and must believe that they will be.
4. Employees must have an avenue of appeal when they believe they are being treated unfairly.
By implementing these four basic principles within a relatively simple organizational structure, Nucor has been able to attract and retain highly talented and productive employees.
Performance Based Compensation
Nucor provides employees with a performance related compensation system that rewards goal-oriented individuals. All employees are covered under one of four basic compensation plans, each featuring incentives related to meeting specific goals and targets.
1. Production Incentive Plan: Operating and maintenance employees and supervisors at the facilities are paid weekly bonuses based on the productivity of their work group. The rate is calculated based on the capabilities of the equipment employed, and no bonus is paid if the equipment is not operating. In general, the Production Incentive bonus can average from 80 to 150 percent of an employee's base pay.
2. Department Manager Incentive Plan: Department Managers earn annual incentive bonuses based primarily on the percentage of net income to dollars of assets employed for their division. These bonuses can be as much as 80 percent of a department manager's base pay.
3. Professional and Clerical Bonus Plan: This bonus is paid to employees that are not on the production or department manager plan and is based on the division's net income return on assets.
4. Senior Officers Incentive Plan: Nucor's senior officers do not have employment contracts. They do not participate in any pension or retirement plans. Their base salaries are set lower than what executives receive in comparable companies. The remainder of their compensation is based on Nucor's annual overall percentage of net income to stockholder's equity and is paid out in cash and stock.
In addition to these established bonus plans, Nucor has periodically issued an extraordinary bonus to all employees, except officers, in years of particularly strong company performance. This bonus has been as high as $1000 for each employee.
Egalitarian Benefits
Nucor takes an egalitarian approach to providing benefits to its employees. That is, the upper levels of management do not enjoy better insurance programs, vacation schedules, or holidays. In fact, certain benefits such as Nucor's Profit Sharing, Scholarship Program, Employee Stock Purchase Plan, Extraordinary Bonus, and Service Awards Program are not available to Nucor's officers. Senior executives do not enjoy traditional perquisites such as company cars, corporate jets, executive dining rooms, or executive parking places.
Customer Service and Quality
Nucor is committed to uncompromising quality, responsive service, and competitive pricing. Through continuous innovation, modern equipment, dedication to the customer, and concentration on productivity from a highly motivated work force, Nucor has distinguished itself as a leading producer of quality steel and steel products. Many Nucor locations are ISO 9000 Certified. Nucor employees are committed to providing customers with the highest quality levels at the most competitive prices. And, while steel and steel products are Nucor's business, the real business of Nucor is its commitment to each and every customer on each and every order.
Technological Leadership
Nucor's strong emphasis on employee communication and commitment carries with it the commitment to provide the work force with the best technology available to get the job done right in a safe working environment. As evidence of that commitment, Nucor aggressively pursues the latest advancements in steel making around the world to determine what technology it can adapt in its facilities.