Nucor at a Crossroads

Submitted By
Ankur Bhagat-06
Deepika Chainani-13
Jitesh Jain-21
Shatakshi Tripathi-48
Varun Bhargava-61
Vignesh C-63

Why has Nucor Performed

so well in Past

Advantages
First
Narrow
Low
Flatter
Calculated
product
Mini
mover
organization-Faster
product
Mill-Used
risk
in
location
differentiation
adopting
and
lineElectric
special
(Specific
Proximity
Innovative
Communication
furnace
focus
and
Products)
less
to
ontechnology
customer
to
competition
Stakeholders
melt scrap
with the
initially
into
(Employees,
company
steel
Custom

Q2. How attractive do the economics of

thin
slab casting look?
Cost Effective

Thin Slab Casting

- a sustainable competitive

advantage?

Yes, Thin Slab Casting would give Nucor the sustainable

competitive advantage due to the following:

First Steel
Flat
Ease
Same
Capturing
Smaller
Nucor
Mover
indisadvantage
has
production:
Size
has
the
well
advantage
ofthe
Lions
established
Plants
share
Number
of
Share:
(.8-1
reheating
of 50%
capital
MT)
Automobile
of Rollers
in
ofthe
comparison
the
(Plant,
slabs
US
required
and
Steel
before
appliance
with
is
Market
four
rolling
usual
compared
sector
as
3MT
inisthe
for
poss
to
ac
ina

Uncertainties Involved
May

not give first mover advantage for long only

2-3 years head start
As SMS is interested in diffusing the technology
broadly, competitors advantage might be lost
Nucor might face Operational challenges because
of its policy of locating plants in rural areas ( plant
larger and complex then any previous plant built)
Integrated Mills might be able to outpace Nucor if
they adopted CSP
If they accept both the projects , they might face
issues stretching their Financial and Managerial
resources
Might become obsolete in 10-12 years

What should Nucor do ?

As

first mover advantage will only last for

few initial years , and competitors will
copy it soon if it is a success
And also its success is not guaranteed
They should not currently go ahead with
CSP
Wait for other minimills to implement as
SMS would surely sell it to others and if
successfully implemented by others ,
they can go ahead as there wont be any
risk involved of its failure

Strategic Decision
To

take the first movers advantage or not : Whether to commit Nucor

to a new steel mill that would commercialize thin slab casting
technology developed by SMS.
The mill would cost $280 million and $30 million each working capital
and start-up expenses which would be equal to Nucors net worth.
Considering the pace at which technology

Operational Decision
Dealing

with the challenges in manufacturing flat products which

required specialization as they dealt only with non-flat products.
The initial method followed by Nucor for setting up and running the
plants involved training of the youths of the respective location and
then letting them run it. However, the proposed system would require
a trained team for set up and operations, a method which was new to
Nucor.

Tactical Decision

Nucor decided to focus on the low price market of flatsheets but they would also have to focus on the high
end market if they plan to expand.
They would require relationship-based marketing to
sell their high end products in which they had no prior
experience since they always followed the cost
leadership strategy.
Starting the thin slab project along with the existing JV
with Yamato Kogyo would result in incurring capital
expenditures of $100 million, $250 million and $60
million or more in the years 1987,1988 and 1989
respectively. This cost of funding was substantial
which Nucor might not be able to handle.