NUCOR: AMERICA’S STEEL (RE)MAKER Team Members: Hannah Williams, Sara McKeever, Ondrea Null, Mark Hast and Brady Inners http://www.nucormotivation.weebly.com

History 1905-Ransom E. Olds forms REO Motor Company 1955-REO Motor Company merges with Nuclear Consultants, Inc. and forms Nuclear Corporation Of America Most important decision for the company occurred in 1965!

History 1965-Ken Iverson becomes president of Nuclear Corporation of America 1969-First mini mill in Darlington, South Carolina 1971-Focus narrowed to just steel production. Name changed from Nuclear Corporation of America to Nucor 1974-Enacts foundation to provide higher education to teammates’ children

Question One! What move saved Nuclear Corporation Of America from bankruptcy? When did this occur?

Answer One! Ken Iverson becoming president of Nuclear Corporation Of America in 1965 saves the company from bankruptcy!

Background Ken Iverson Became president when company barely staving off bankruptcy Sold off under-performing divisions of company; focused on steel production Low cost of production, state-of-the-art production process, and high worker efficiency set Nucor apart Nucor became an innovator in steel production as well as a Fortune 500 company

The culture of Nucor created mostly by Ken Iverson was one that was based off of rewards. Not only were employees compensated financially for their hard work -- EXTRINSIC REWARDS: financial, material, and social rewards that come from the environment -- but the sense of satisfaction gained from being a contributing member of a successful team. INTRINSIC REWARDS: psychic rewards that are self-granted. Buzzwords to Mention: TOTAL REWARDS: encompass not only compensation and benefits, but also personal and professional growth opportunities and a motivating work environment that includes recognition, job design, and work-life balance “70% culture and 30% technology. The truth is, I’m not sure if it’s 80 to 20 or 60 to 40 percent, but I’m certain our culture accounts from more than half our success as a business.” – F. Kenneth Iverson

History 1995-Ken Iverson steps down as president and becomes chairman of the board of directors 2000-Dan DiMicco is named new president and CEO 2002-Developed world’s first micro mill in Crawfordsville,  2011-Breaks ground on state-of-the-art facility that converts natural gas and iron ore pellets into iron in St. James Parish, Louisiana Indiana. Nucor has grown from its time of being close to bankruptcy to having: A $5 billion in market value or 35 percent compounded growth Amazing for the steel industry!

Question Two! What three factors set Nucor apart from other Steel industries during the time of Ken Iverson? A. Low Cost of Production, High Worker Efficiency, and Low Prices B. Low Cost of Production, State-of-the-Art Production Process, and High Worker Efficiency C. High Worker Efficiency, Low Prices, and State-of-the-Art Production Process

Answer Two! B. Low Cost of Production, State-of-the-Art Production Process, and High Worker Efficiency

Background Dan DiMicco Grew Nucor into a world-wide leader with over 20,000 teammates at 212 facilities Expended during times of recession; bought competitors assets for fraction of their initial costs Numerous incentive programs to keep labor costs low; production and motivation high (MOTIVATORS!) Each employee has a voice in manufacturing process No gap between employees and high ranking officials Buzzwords To Mention: MOTIVATORS - Job satisfaction was more frequently associated with achievement, recognition, characteristics of the work, responsibility, and advancement. Having a voice in the company they worked for made “lower level” employees feel good about the work they were doing  leading to high motivation! INTRINSIC MOTIVATION - occurs when an individual is turned on to one’s work because of the positive internal feelings that are generated by doing well, rather than being dependent on external factors for the motivation to work effectively Not having a large gap between employees and high ranking officials  gave all employees a general sense of satisfaction, no matter what pay grade they were in because they felt equally liable for the company succeeding in all of its endeavors These types of motivation to do well leads to JOB SATISFACTION - an affective or emotional response toward various facets of one’s job Employees that are treated as equals and are ZAPPED by their superiors are more likely to have a positive view of their place of work

Question Three! What occurs when an individual has positive internal feelings that are generated by doing well, rather than feeling dependent on external factors?

Answer Three! Intrinsic Motivation!

Either before or after the video – The employees are happy with their jobs at Nucor because of the reasons talked about in the video, etc. Buzzwords to Mention - Something to get more in-depth about later:   TURNOVER- How often a company replaces employees The Nucor employees, although they may not have the same pay as others in their field, do have job security, which is valuable in the ever-fluctuating economy

What does the term FOCUS stand for? Question Four! What does the term FOCUS stand for?

Answer Four! F – Steel that FITS O – ON Time Deliveries C – COMPETITIVE Pricing U – UNBEATABLE Service S – SOLUTIONS that Work

Present Day 2013 – Dan DiMicco steps down and becomes Executive Chairman, promising to remain an active voice for trade and manufacturing policy 2013-John J. Ferriola named new president and CEO World’s 4th largest steel producer by market capitalization STATISTICS to mention: Nucor is North America's largest recycler of any material, recycling one ton of steel every two seconds

Continuous Growth “Nucor was founded on some pretty basic principles: that steel could be produced in a more efficient, and environmentally friendly way. That our employees, neighbors and shareholders should always be treated fairly, honestly, and respectfully. That our decisions should be based on securing long-term survival, not a short-term gain. That management should always be accessible and accountable. And that everyone in our company should conduct themselves according to the highest ethical standards. “

Continuous Growth Buys land around their new developments  Easy ability to expand! 2006 – Acquisition of Harris Steel Group  entry into the rebar fabrication market, and significantly advances Nucor’s downstream growth initiatives (Horizontal growth) 2008- Acquisition of The David J. Joseph Company  one of the nation’s largest scrap processors and brokers. –Gives further control of its primary feedstock – scrap steel. (Vertical growth) 2012- enters into a long-term agreement with Encana Oil and Gas (USA) Inc.  ensure a reliable, low cost supply of natural gas for more than 20 years

Question Five! Name one way Nucor prepares for the future/maintains their low-cost strategies

Answer Five! Buying land around developments Horizontal growth  Harris Steel Group Vertical growth  The David J. Joseph Company Low-cost supply of natural gas for more than 20 years Encana Oil and Gas (USA) Inc.

Low-Cost Leadership Strategy The objective of its classic best-product strategy is to be the lowest cost producer in the steel industry. Its costs are $40 to $50 per ton less than those in the modern, fully integrated mills. Its sales per employee are $560,000 per year, compared to an average $240,000 for the industry. INDIVISIBLE

Five Competitive Forces Rivalry Among Steel Producers Competition from Substitutes Threat of Entry Bargaining Power of Suppliers Chinese companies purchasing US scrap metal Bargaining Power of Customers

Name TWO of the FIVE competitive forces of the steel industry. Question Six! Name TWO of the FIVE competitive forces of the steel industry.

Answer Six! Rivalry Among Steel Producers Competition from Substitutes Threat of Entry Bargaining Power of Suppliers Bargaining Power of Customers

Low-Cost Leadership Strategy Continuously adopting cost-saving ideas and production efficiency Using incentive compensation for production workers Charges low prices and win orders over competitors to keep Nucor plants running at full “Plays offense” to build sales and grow in business  

Incentive Compensation System Incentive plan not only encourages employees to perform well at individual level and team level Production Incentive Plans Department Manager Incentive Plan Professional and Clerical Bonus Pay Senior Officers Incentive Plan Well developed benefit plan ranging from 401(k) and profit sharing to medical and dental places Scholarships for children of employees Buzzwords to Mention – PAY FOR PERFORMANCE – monetary incentives linking at least some portion of the paycheck directly to results or accomplishments  

HR Practices and Policies No lay-off policy and empowerment of employees Practices well-matched to low-cost provider strategy Strong reliance on production incentives Encourage employees to better themselves through study Buzzwords to Mention: PE FIT - the compatibility between an individual and a work environment that occurs when their characteristics are well matched. Employees at Nucor have to fit a specific type considering they do not make the same pay as others in their industry (Although there are numerous benefits and incentive programs to make up for it in the long run)

Question Seven! Name TWO of the FOUR incentive plans put into play by Nucor as part of their low-cost leadership strategy Buzzwords to Mention: PE FIT - the compatibility between an individual and a work environment that occurs when their characteristics are well matched. Employees at Nucor have to fit a specific type considering they do not make the same pay as others in their industry (Although there are numerous benefits and incentive programs to make up for it in the long run)

Answer Seven! Production Incentive Plans Department Manager Incentive Plan Professional and Clerical Bonus Pay Senior Officers Incentive Plan Buzzwords to Mention: PE FIT - the compatibility between an individual and a work environment that occurs when their characteristics are well matched. Employees at Nucor have to fit a specific type considering they do not make the same pay as others in their industry (Although there are numerous benefits and incentive programs to make up for it in the long run)

Low-Cost Leadership Strategy Cost-Conscious Operating Lean Corporate Staff Pay For Performance Lower hourly wages, great rewards program High motivation due to equal treatment for all Operating decisions made at division level 4 management layers between CEO’s and employees Corporate office staff of only 75 people Buzzwords to Mention – PAY FOR PERFORMANCE – monetary incentives linking at least some portion of the paycheck directly to results or accomplishments 66% of weekly pay based on PERFORMANCE Company-wide emphasis on performance is reflected in a miniscule absenteeism rate of 1.0% per year Teammates – not managers – drive Nucor’s success. They promote the importance of equality for everyone. And when times get tight, they believe in “PAIN SHARING” where top management takes a pay cut before anyone else. Base salaries: average Nucor steelworker makes $10 per hour, as opposed to $16 to $21 an hour for workers at comparable firms. The base pay of Nucor’s department managers is likewise only 75% to 90% of the market average.

Aspects of Strong Leadership Senior officers not provided with traditional benefits Annual reports show names of all employees Low costs  profitable every quarter since 1966 Few corporate perks Buzzwords to Mention – PAY FOR PERFORMANCE – monetary incentives linking at least some portion of the paycheck directly to results or accomplishments

Culture and Responsibility Employees must: Effective operating style Achieve the goals put upon them Understand the rewards Be a participative member of the company Provide feedback Safety first Eliminating hierarchy Trust and freedom Inspiring work ethic All workers have a stake in the company

“To keep a cooperative and productive “To keep a cooperative and productive workforce you need, number one, to be completely honest about everything; number two, to allow each employee as much as possible to make decisions about that employee’s work , to find easier and more productive ways to perform duties; and number three, to be as fair as possible to all employees. Most of the changes we make in the work procedures and in equipment come from the employees. They really know the problems of their jobs better than anyone else.” – Dave Aycock

Final Question! What buzzword from the presentation best describes why Nucor is so successful today? Buzzwords to Mention – PAY FOR PERFORMANCE – monetary incentives linking at least some portion of the paycheck directly to results or accomplishments

Answer! Pay for Performance!

Thank You!