Nuclear Corporation of America Analysis Essay

Nuclear Corporation of America was involved in the nuclear instrument and electronics business. In 1964, the company’s board of directors opted for new leadership due to suffering several money-losing years and facing bankruptcy. F. Kenneth Iverson was the new leader, president, and CEO of Nuclear Corporation. F. Kenneth decided that the best way to rebuild the company was to expand around its profitable South Carolina. Iverson was already the head of Vulcraft before adopting Nuclear Corporation. He had a vision that by joining Vulcraft and Nuclear together it would be great opportunities.

Iverson concluded that the best way was for Nucor to make a different path altogether with their successful Vulcraft subsidiary in the steel business. In 1972, Nucor Corporation was adopted as a steel import company. Nucor is a steel company based in North Carolina (headquarters). This company had become the seventh largest steel company in America. This company was very profitable and its revenue was out the roof. Nuclear became the leading steel manufacturer that offers steel bars, steel joints and girders, reinforcing bars, and steel decks that are made of scrap.

Within several years Nucor had became the largest steelmaker in North America. Nucor has been the most successful American steel maker for more than 35 years. It has a unique company culture and is recognized as the technology leader in its field. In an industry that is heavily unionized, Nucor’s work force is non-union. By the end of 2007 the company had 20 plants in its steel mill segment, 32 in the steel products segment, and one reduced iron ore plant in Trinidad. The organizational structure is flat and decentralized with only four levels of management.

Despite its long track record of growth and financial success, Nucor’s business sank like a stone in the fourth quarter of 2008. Context The steel industry is often considered an indicator of economic process, because of the critical role played by steel. The U. S. steel industry is a $60 billion enterprise, with more than about 800 firms operation in a few states. The industry employs over 189,000 people nationwide. The industry of steel has invested more than $8 billion in the environmental controls as being the largest energy consumers in the manufacturing sector.

Steel is an alloy of iron and other elements that involves mainly carbon. Carbon and other elements act as a hardening that prevents dislocations in the iron from sliding past one another. Other elements that add to modify the steel and its characteristics are nickel, titanium, and manganese. Steel uses both energy to supply heath and power for its operation. Iron and steel are used in the construction of roads, railways, and other appliances and buildings. Variety of large structures as bridges airports and skyscrapers are supported by steel skeleton.

Steel skeleton is a steel frame with a variety of of vertical steel columns and horizontal I-beams, constructed in a rectangular grid to support the floors, roof and walls of a building which are all attached to the frame. The development of this technique made the construction of the skyscraper possible. But all these things and developments started from steel. Steel is a major component in the world. Today, the steel industry is vital to both economic competitiveness and national security. Steel is the backbone to most operations and items that we view and see on a daily.

The steel that is used today is high-strength steel that is lighter and more versatile to the world. Steel is one of the most common materials that have more than about 1. 3 billion tons produced annually. However, modern steel is generally identified by assorted organizations. External Analysis In the 1960 steel was produced in huge plants using capital-intensive basic oxygen blast furnace technology and open hearth furnace technology where steel was made from scratch. The advent of electric arc furnace technology spurred new start-up companies to enter the steel business.

Minimills were introduced to produce steel on a much smaller scale than integrated mill. Technology improved and by the 1980 minimills were able to compete in the market to produce even more steel. However, at one point in time minimills were only able to make low-end steel products using electric arc furnace technology at one point in time. Electric arc furnace technology begins to take over the steel industry. By 2005 electric technology produce an average of 33 percent of the world’s steel. Nucor was now at a good stage in their plants when a new technology was introduced called thin-slab casting technology.

This was another technology that was produced that many integrated producers begin to use in order to protect their profit margins and market shares. Thin-slab was developed by SMS of Germany that pioneered in the United States to Nucor because of the knowledge of usage to the plants. Competing successfully in the industry of steel simply means to be above and beyond. From 2003-2006 an average of 90 percent of the world’s population involved the use of casting technology. Conversely, open hearth technology was neglected and was only used in pans in Russia, India and majority Eastern European countries.

That major transformation from hearth technology to electric arc technology and the use of casting technology presented that hearth technology was no longer the best option in the United States when producing steel. Internal Analysis Nucor and its technology play a major part as one of the company strengths. After several years of testing Nucor introduced in 2005 a new technology at its Crawfordsville facilities, a process called Castrip. This was one of Nucor biggest and most recent success in pioneering its technology. The company’s minimill technology brought innovation to the product and to the company.

Minimill lowers production cost and pollution that made their price to the market substantially low. The use of these kinds of technology is their edge in the steel industry. These technologies have made the business grow because of developing innovation. Nucor was looking for other opportunities for global growth. This was the fourth component of Nucor’s strategy by jointing ventures and licensing new technology. Unfortunately, the company did not currently have any plans to build and operate outside the United States. The only company operated foreign plant was in Trinidad.

Location is considered Nucor’s weakness. The company only has 59 facilities in 17 states, but don’t have plants in different countries. With this limitation, completion becomes involved and all potential clients begin to look for other options to buy from other steel company closest to their location. Nucor’s vision was to continue to promote growth and be a technology leader. They were also promoting to be aggressive in constructing new plant capacity such as construction. The key vision was for Nucor to continue making capital investments to improve plant efficiency and to keep down the production at a low cost.

Nucor management believed that focusing on the introduction of technologies it would give Nucor a commanding market advantage. Nucor continues to carry their title as the industry’s innovator that starts a new trend. Financial Analysis Nucor has been doing very well in the past 5 years by developing the right strategy. This company is presented with new threats and opportunities. CEO Iverson of Nucor made a decision that could present an opportunity into the financial operation of Nucor to bring them out of bankruptcy. Nucor, which was a leader they wanted to enter a very good market. Year 2005 Current Ratio $4,071. /$1,255. 7=3. 24 Working Capital $4,071. 6-$1,255. 7=$2,815. 9 Year 2006 Current Ratio $4,675. 0/ $1,450. 0=3. 22 Working Capital $4,675. 0-$1,450. 0=$3,225 By year 2005 and 2006 there was a decrease in current ratio but a rise in working capital. Nucor financial summary shows that in year 2005 current assets were $4,071. 6 and liabilities of $1,255. 7 which showed an average current ratio of 3. 24 for 2005. Working Capital for that same year reflected a balance of $2,815. 9. In year 2006 current assets were $4,675. 0 which went up and liabilities of $1,450. 0 came out to an average 3. 22 which went down from 3. 24 in 2005.

Capital went up by a total $409. 10, reflected by the end of 2006 the working capital for Nucor was substantially higher. Business Strategy Nucor operates in a relatively mature market. Their productivity and cost efficiency through optimized operations help moderate their pricing. Nucor’s strategy is to acquire a source of raw material or integrate some new technology into their operations. The goal is to expand in higher value-added sheet markets. Nucor’s strategy to become competitive includes introduction of new steelmaking technology and seek growth through acquisitions and joint ventures to source one-third of its raw material equirements. The company is leaning toward acquiring new business that increases production capacity, participation in downstream steel projects, and provides resources of raw materials. The objective is to rise against costs of raw materials, reduce on imports, and better manage costs. Five Forces Analyses Suppliers of Raw Materials: Nucor started several small plants that were close to suppliers & customers, thereby reducing transportation costs. Also, the sites chosen had inexpensive electricity. Their policies resulted in them having steady supply of new employees which the supplier power was low.

Buyers: Nucor employed the latest technology & competitive prices, with imported steel available, the buyers had more options to choose from. Nucor’s customer service was that buyers were willing to pay for. Firms in other Industries: Minimill technology was a great invention. This technology was also for existing integrated steel makers which adapted to newer technology. Smaller businesses were discouraged into the market of the minimills. This helped Nucor as their point of view. Potential New Entrants: Nucor had a wide availability of substitutes such as aluminum, and plastics which was for the demand of steel.

The threat of others in the future was highly unattractive. Rivalry: Nucor always had the cost advantage & efficiency force with technology & innovation. It was a challenged for the steel makers which resulted in lowering of prices & lower margins. Nucor however was highly focused on its customers so its degree of rivalry was high. Current Situation Today Nucor is preparing for even more growth. Nucor expect to see full benefits of about $7 billion in investments made from 2007 through 2011. They invested more in 2013 and looking forward to 2013 to grown during the next cyclical peak in the economy.

Nucor is also planning to optimize and continuously improve existing operations and their teammates. Nucor plan to execute and grow their raw materials strategy. Expand through Greenfield growth and tax advantage of new technology and unique market niches. They want to seek international growth still through via joint ventures and grow through strategic acquisitions. Recommendation * Nucor should expand internationally, as talked about in this paper. Nucor should make joint ventures with suppliers to keep the cost down of the product as the book reflects that Nucor never fell through with the venture. A lot of scrap that is used is imported so it would be a good idea for Nucor to utilize that to reduce costs of making their products. * Identify more products and technology to advance Nucor as a business. * Discover alternative materials that can be used in Nucor plant to reduce the reliability n scrap metal. * To put in place job descriptions for employees. By doing this it will save Nucor fees and troubles if something arises in the workplace between the employee and the company’s job duties or injuries. Nucor didn’t use job descriptions because management believed job descriptions caused more problems than they solved.