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Nucor Case Analysis
- 1. Nucor Case Analysis StrategicManagement in the Global Environment Brad Skwarski
- 2. Nucor: Overview Nucoroperates under three main segments consisting of Steel Mills, Steel Products and Raw Materials. Nucor Corporation and its affiliates manufacture steel and steel products. The Company also produces direct reduced iron (“DRI”) for use in the Company’s steel mills. Through The David J. Joseph Company and its affiliates (“DJJ”), the Company also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (“HBI”) and DRI. Most of the Company’s operating facilities and customers are located in North America, but Nucor does business outside of North America as well. The Company’s operations include several international trading companies that buy and sell steel and steel products manufactured by the Company and others. Nucor is North America’s largest recycler, using scrap steel as the primary raw material in producing steel and steel products. In 2016, we recycled approximately 17.6 million tons of scrap steel.
- 3. Nucor Timeline In1905, Ransom E. Olds, creator of the Oldsmobile, had a dispute with stockholders and left his own company — Olds Motor Works. He soon formed REO Motor Company, which evolved into the Nuclear Corporation of America and ultimately, Nucor 1955 - While successful at first, REO ultimately relied on defense contracts to stay in business. And when the Korean War ended in 1955, so too did REO. Its assets were merged with Nuclear Consultants, Inc. to form Nuclear Corporation of America 1962 - This was the year that Nuclear Corporation made two moves that would soon change the company and ultimately the American steel industry. First, they acquired a company called Vulcraft, Second, to run Vulcraft, they hired a man named Ken Iverson. 1965 - Barely staving off bankruptcy, Nuclear appointed Ken Iverson as its new president. He acted quickly to put the company on a course toward profitability including selling off inefficient divisions. 1966 - Back on its feet, the company moves corporate headquarters from Phoenix, Arizona to Charlotte, North Carolina. Iverson proposes entering the steelmaking business. 1969 - Nucor’s first mini mill, located in Darlington, South Carolina, goes into production. 1971 - The board of directors elected to change the name of the company from Nuclear Corporation of America to simply Nucor. 1972 - Nucor is listed on the New York Stock Exchange. 1979 - Nucor enters the cold-finish market with a new mill in Norfolk, Nebraska 1980 – Nucor breaks into the Fortune 500 1986 - Nucor enters the steel fastener market with a new production facility in St. Joe, Indiana. 1988 – Through a joint venture with Japanese company Yamato Kogyo, The Nucor – Yamato plant in Blytheville, Arkansas, becomes the first mini mill in the U.S. to manufacture wide-flange beams with a depth of 40 inches. 1989 - Nucor ushers in a new era of steelmaking as thin-slab technology goes on-line at the new mini mill in Crawfordsville, Indiana. It is the first mini mill in the world to make quality flat rolled steel using the technology.
- 4. Nucor Timeline -Continued 1995 - Ken Iverson steps down from day-to-day operations and focuses on his role as chairman of the board of directors. 1998 - Nucor announces plans to construct a state- of-the-art plate mill facility in Hertford County, North Carolina. 2000 - Dan DiMicco is named the new President and CEO of Nucor. DiMicco has led the company through an unparalleled period of growth and championed their ongoing fight for fair trade practices to save American jobs and our U.S. manufacturing industry. 2002 - Another world first: Nucor’s Castrip micro mill goes on-line in Crawfordsville, Indiana. Producing Ultra-Thin Cast Steel (UCS), the process instantly transforms molten steel directly into steel sheets in just one remarkable step. Compared to an integrated steelmaking facility, the Castrip process consumes about 95% less energy and emits less than one-tenth the greenhouse gases. 2006 - To complement their SBQ mills in Nebraska and South Carolina, Nucor opens a state-of-the-art SBQ facility in Memphis, Tennessee. This makes the Nucor SBQ product line one of the most diverse in the industry. 2007 - Nucor’s $1.07 billion acquisition of Harris Steel Group provides entry into the rebar fabrication market and significantly advances Nucor’s downstream growth initiatives. 2008 - Nucor acquires The David J. Joseph Company, one of the nation’s largest scrap processors and brokers. The acquisition gives Nucor further control of its primary feedstock - scrap steel - which makes up 75 to 90 percent of the materials used to recycle steel. 2010 - From 2001 to 2010, Nucor grew at an unprecedented rate, taking its place as the nation's leading producer of steel. During that time, Nucor made over 15 acquisitions, entered into multiple partnerships, and developed a number of new facilities and businesses. 2011 - Nucor begins development on its $750 million direct reduced iron (DRI) facility. The innovative direct reduction technology converts natural gas and iron ore pellets into direct reduced iron used to produce all kinds of high quality steel products. 2012 - Nucor enters into a long-term agreement with Encana Oil & Gas (USA) Inc. that will ensure a reliable, low cost supply of natural gas for Nucor's existing and expected future needs for more than 20 years.
- 5. Nucor Timeline -Continued 2013 - John J. Ferriola assumes the role of Chief Executive Officer and President of Nucor Corporation, succeeding Dan DiMicco, who would serve another year as Executive Chairman. The next year, Ferriola would also take on the responsibilities of Executive Chairman, as DiMicco was bestowed the honorary title of Chairman. 2014 - Nucor’s $750 million direct reduced iron (DRI) plant in St. James Parish, Louisiana becomes fully operational. Production of DRI gives Nucor greater flexibility to respond to increases and volatility in raw material prices. 2015 - Nucor acquires Gerdau Long Steel’s Bright Bar assets located in Orrville, Ohio, and Cartersville, Georgia. The acquisition improves Nucor’s geographic coverage and expands the company’s range of products in this important market segment. 2016 - Nucor continues to execute its strategy for profitable growth. The company announces a joint venture with JFE Steel Corporation of Japan to build a plant in central Mexico to supply that country’s growing automotive market. Nucor also moves boldly into the steel tubing market, with the acquisition of Independence Tube Corporation, Southland Tube Incorporated, and Republic Conduit.
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- 7. Board of Directors- Continued Board/Committee Position 2015 Annual Fee ($) Lead Director $127,000 Board Member (non-employee directors) $95,000 Audit Committee Chairman $25,000 Compensation and Executive Development Committee Chairman $17,000 Governance and Nominating Committee Chairman $14,000 Name Fees Stock Total Earned or Awards Paid in Cash Peter C. Browning $47,500 — $47,500 Harvey B. Gantt $95,000 $139,962 $234,962 Gregory J. Hayes $120,000 $139,962 $259,962 Victoria F. Haynes $112,000 $139,962 $251,962 Bernard L. Kasriel $95,000 $139,962 $234,962 Christopher J. Kearney $95,000 $139,962 $234,962 Laurette T. Koellner $47,500 — $47,500 Raymond J. Milchovich $141,000 $139,962 $280,962 John H. Walker $95,000 $139,962 $234,962
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- 9. Organizational Structure Nucorhas 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 a group or plant level managers and their staff. Each group or plant operates independently as a profit center and is headed by a general manager, who in most cases also holds the title of vice president. Chairman / Vice Chairman / President Vice President / Plant General Manager Department Manager Supervisor The organizational structure at a typical plant has four layers: 1. General manager 2. Department manager 3. Supervisor or professional 4. Hourly employee “We have a very flat organization structure,” said president and CEO John Correnti. “The standard joke in the company is if you are a janitor and you get five promotions, you have Correnti’s job.
- 10. Mission Statement: "Nucor Corporationis made up of approximately 20,000 teammates whose goal is to "Take Care of Our Customers." We are accomplishing this by being the safest, highest quality, lowest cost, most productive and most profitable steel and steel products company in the world. We are committed to doing this while being cultural and environmental stewards in our communities where we live and work. We are succeeding by working together. "
- 11. Nucor Strategy Starting in2000, Nucor embarked on a five point growth strategy that involved new acquisitions, new plant construction, continued plant upgrades and cost reduction efforts, international growth through joint ventures, and greater control over raw materials.
- 12. Steel Industry Companiesin this industry manufacture pig iron, steel and ferroalloys. Pig iron is often manufactured in a blast furnace or via newer direct-reduction methods. Steel may be manufactured in basic oxygen furnaces (newly made steel) or in electric arc furnaces (recycled steel). This industry also includes operators that manufacture basic steel shapes, such as bars, plates, rods, sheets, strips and wire or form pipes and tubes from steel they have produced themselves. Industry Structure Life Cycle Stage: Mature Revenue Volatility: High Capital Intensity: Medium Industry Assistance: High Concentration Level: Medium Regulation Level: Medium Technology Change: Medium Barriers to Entry: High Industry Globalization: Medium Competition Level: High
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- 14. Market Share Data- Continued 84.9% 6.3% 3.1% 3.0% 2.7% 5.7% Global Market Share %, By Volume, 2015 Other ArcelorMittal Hesteel Group NSSMC POSCO 24.5% 20.3% 14.4% 40.8% United States Steel Market Share %, By Volume, 2015 Nucor Corp. ArcelorMittal United States Steel Corp. Other 27.0% 18.0% 17.0% 12.0% 8.0% 2.0% 2.0% 4.0% 10.0% U.S. domestic steel shipments by market, 2015 Steel Service & Distribution Centers Construction Automotive Industry Exports Steel for Conversion & Processig Containers & Packaging Oil & Gas Industry Non-Classified All Other
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- 16. Short Range Forecast In 2017 and 2018 there will be a cyclical upturn in steel demand with a continuing recovery in the developed economies and an accelerating growth momentum in the emerging and developing economies. China, which accounts for 45% of global steel demand, is expected to return to a more subdued growth rate. For this reason, overall growth momentum will remain modest. In 2017-18 oil prices are expected to show a moderate gain. The mildly rising oil prices may stimulate investment in economies worldwide. The construction, building and infrastructure sector, which accounts for 50% of global steel use, has been showing a divided picture between the developing and developed economies. This sector has been a major driver for steel demand in the developing countries driven by urbanization, but activity in the developed economies since the 2008 financial crisis has been more subdued. This appears to be about to change with a recovery in construction activities apparent in the EU through the improving economic conditions and the potential renewal initiatives for infrastructure in the US. While the Chinese economic outlook appears stable and steel demand continues to remain strong in the early part of 2017, this is expected to gradually decelerate as the government tries to retighten its real estate policies. China’s steel demand is expected to remain flat in 2017 and then decline by -2% in 2018. Steel demand in the developed economies will increase by 0.7 % in 2017 and 1.2 % in 2018. Steel demand in the emerging and developing economies excluding China, which accounts for 30% of world total, is expected to grow by 4.0% in 2017 and then 4.9% in 2018.
- 17. Stock Analysis $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 6/1/16 7/1/168/1/16 9/1/16 10/1/16 11/1/16 12/1/16 1/1/17 2/1/17 3/1/17 4/1/17 5/1/17 Stock Analysis: 1 Year Nucor (NUE) ArcelorMittal (MT) United States Steel Corp. (X) $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 Stock Analysis: 5 Year Nucor (NUE) ArcelorMittal (MT) United States Steel Corp. (X)
- 18. Financial Analysis 2012-12 2013-122014-12 2015-12 2016-12 Current Ratio 2.79 3.27 3.07 4.15 2.72 Quick Ratio 1.41 1.69 1.52 2.47 1.6 Financial Leverage 1.85 1.99 2.01 1.92 1.93 Debt/Equity 0.44 0.57 0.56 0.59 0.47 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 Liquidity/Financial Health Ratios 2012-12 2013-12 2014-12 2015-12 2016-12 Net Margin % 2.60% 2.56% 3.38% 2.18% 4.90% Return on Assets % 3.51% 3.32% 4.63% 2.40% 5.39% Return on Equity % 6.68% 6.38% 9.26% 4.71% 10.38% Return on Invested Capital % 5.36% 5.11% 6.79% 3.96% 7.57% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Profitability
- 19. Financial Analysis -Continued 2012-12 2013-12 2014-12 2015-12 2016-12 Asset Turnover (Avg) 1.35 1.30 1.37 1.10 1.10 Financial Leverage (Avg) 1.85 1.99 2.01 1.92 1.93 0.00 0.50 1.00 1.50 2.00 2.50 Profitability Part II 2012-12 2013-12 2014-12 2015-12 2016-12 Days Sales Outstanding 32.11 33.7 33.54 38.32 33.95 Days Inventory 43.91 50.99 50.86 60.07 59.52 Payables Period 20.43 22.38 20.07 19.17 18.08 Cash Conversion Cycle 55.59 62.31 64.34 79.23 75.4 0 10 20 30 40 50 60 70 80 90 Efficiency
- 20. Financial Analysis -Continued 2012-12 2013-12 2014-12 2015-12 2016-12 Receivables Turnover 11.37 10.83 10.88 9.52 10.75 Inventory Turnover 8.31 7.16 7.18 6.08 6.13 Fixed Assets Turnover 4.83 4.14 4.14 3.23 3.25 Asset Turnover 1.35 1.3 1.37 1.1 1.1 0 2 4 6 8 10 12 Efficiency: Part II
- 21. Altman Z Score,Tobin’s Q & DuPont Analysis (Working Capital / Total Assets * 1.2 ) 2012-12 2013-12 2014-12 2015-12 2016-12 Working Capital $3,631 $4,450 $4,344 $4,369 $4,116 Total Assets $14,152 $15,203 $15,616 $14,250 $15,224 A 0.26 0.29 0.28 0.31 0.27 + ( Retained Earnings/ Total Assets * 1.4) 2012-12 2013-12 2014-12 2015-12 2016-12 Retained Earnings $7,125 $7,140 $7,378 $7,256 $7,631 Total Assets $14,152 $15,203 $15,616 $14,250 $15,224 B 0.50 0.47 0.47 0.51 0.50 + (EBIT/Total Assets * 3.3 ) 2012-12 2013-12 2014-12 2015-12 2016-12 EBIT $853 $791 $1,205 $709 $1,299 Total Assets $14,152 $15,203 $15,616 $14,250 $15,224 C 0.06 0.05 0.08 0.05 0.09 + (Market Value / Total Liabilities * .6 ) 2012-12 2013-12 2014-12 2015-12 2016-12 Shares (Millions) 318 319 320 321 320 Book value per Share $24.06 $23.89 $24.24 $24.25 $24.24 Market value $7,651 $7,621 $7,757 $7,784 $7,757 Total Liabilities $6,510 $7,558 $7,843 $6,834 $7,344 D 1.18 1.01 0.99 1.14 1.06 + (Sales / Total Assets * 1.1 ) 2012-12 2013-12 2014-12 2015-12 2016-12 Revenue $19,429 $19,052 $21,105 $16,439 $16,208 Total Assets $14,152 $15,203 $15,616 $14,250 $15,224 E 1.37 1.25 1.35 1.15 1.06 2012-12 2013-12 2014-12 2015-12 2016-12 Altman Z Score 3.29 3.04 3.19 3.08 3.01 *USD in millions except per share data. Total Assets / Market Value 2012-12 2013-12 2014-12 2015-12 2016-12 Total Assets $14,152 $15,203 $15,616 $14,250 $15,224 Market value $7,651 $7,621 $7,757 $7,784 $7,757 Tobins Q 0.54 0.50 0.50 0.55 0.51 Net Income $505 $488 $714 $358 $796 Revenue $19,429 $19,052 $21,105 $16,439 $16,208 Profitability Margin 2.60% 2.56% 3.38% 2.18% 4.91% Revenue $19,429 $19,052 $21,105 $16,439 $16,208 Total Assets $14,152 $15,203 $15,616 $14,250 $15,224 Total Asset Turnover 1.37 1.25 1.35 1.15 1.06 Total Assets $14,152 $15,203 $15,616 $14,250 $15,224 Total Stockholders' equity $7,642 $7,646 $7,772 $7,417 $7,880 Financial Leverage 1.85 1.99 2.01 1.92 1.93 ROE 6.61% 6.38% 9.19% 4.83% 10.10%
- 22. Porter’s Five Forces New Entrants: Entering the steel market requires significant capital outlay. Large capital, Economic of scale Govt. rules and regulation Substitute Products: Substitutes exist in the form of aluminum, plastics and composites use of substitute materials may be inferior in buyer industries. Buyer Power: Buyers are primarily large sized and include vehicle manufacturers and construction companies. This size advantage tends to strengthen their power, as they can negotiate lower input prices from steel manufacturers. Supplier Power: Globally, the top three mining giants BHP Billiton, CVRD and Rio Tinto supply nearly two-thirds of the processed iron ore to steel mills and command very high bargaining power. Degree of Rivalry: The steel markets are highly competitive and a number of firms, domestic and foreign, participate in the steel and raw materials markets
- 23. SWOT Analysis: Strengths Diversified and balanced product mix Performance is not tied to any one steel market due to their product line diversity Robust production assets Leading market position in North America Unique Management Philosophy Strong and efficient Administration Strategic Merger & Acquisition to increase capacity and size Continuous adoption of new technology
- 24. SWOT Analysis: Weaknesses Dependence on outside vendors for raw materials Nucor relies rely to an extent on outside vendors to supply the company with raw materials, including both scrap and scrap substitutes that are critical to the manufacture of the products. Although Nucor has further vertically integrated the business they still must purchase most of the primary raw material, steel scrap, from numerous other sources located throughout the US. Capital investment and maintenance expenditures The company's operations are capital intensive. The business also requires substantial expenditures for routine maintenance. Although Nucor expect requirements for the business needs, including the funding of capital expenditures, debt service for financings and any contingencies, will be financed by internally generated funds or from borrowings under the $1.5 billion unsecured revolving credit facility. Substantial capital investment and maintenance expenditures, and the capital resources may not be adequate to provide for all of the cash requirements. High capital investments and maintenance expenditures would reduce the revenues of the business. Too much dependency on US Market There is a lack of market diversification as it derives most of its revenue from the US. This exposes them to the fluctuation in the US economy as demand for steel will decrease when the economy slacken and they would not have an alternative avenue to derive their revenue.
- 25. SWOT Analysis: Opportunities Continued expansion through acquisition of failing steel makers. The onslaught of cheap steel imports is driving many inefficient US steel makers into bankruptcy. This represents an opportunity for Nucor to expand through acquisition. Joint Ventures into developing and growing markets A joint venture with JFE Steel Corporation of Japan to build a plant in central Mexico to supply that country’s growing automotive market. Continued expansion of value-added products Nucor has invested significant capital in recent years to expand their product portfolio to include more value-added steel mill products Shifting product mix to a greater portion of value-added products and increasing end-user market diversity will make Nucor less susceptible to imports. Vertical Integration or establish partnerships with the energy providers to ensure a reliable low cost of energy. Nucor’s long-term agreement with Encana Oil & Gas (USA) Inc. that will ensure a reliable, low cost supply of natural gas for Nucor's existing and expected future needs for more than 20 years. Align with other American Steel Manufacturers and the U.S. Department of Commerce to circumvent the dumping of Import Steel and impose duties and tariffs. Aggressive trade practices, left unchallenged, seriously undermine the ability of Nucor and other domestic producers to compete on price. Rigorous trade law enforcement is critical to our ability to maintain our competitive position against foreign producers that engage in unlawful trade practices. Nucor has been active in calling on policymakers to enforce global trade agreements.
- 26. SWOT Analysis: Threats Changes in the availability and cost of electricity and natural gas. Steel mills are large consumers of electricity and natural gas. In addition, the DRI facilities are also large consumers of natural gas. Nucor relies upon third parties for the supply of energy resources consumed in the manufacture of their products. The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions. Environmental compliance The operations are subject to numerous federal, state and local laws and regulations relating to protection of the environment Competitors, particularly foreign steel producers and manufacturers of competitive products, are not subject to similar regulation and required to incur equivalent costs, the competitive position could be materially adversely impacted. Intense competition Nucor faces strong competition from other steel producers and imports that compete with the products on price and service. The steel markets are highly competitive and a number of firms, domestic and foreign, participate in the steel and raw materials markets. Impact of Chinese Steel Production In 2015, China accounted for half of the world’s steel production, compared to 15 percent in the year 2000. The rapid and significant increase in steel production in developing countries has led to dangerous levels of overcapacity that have significantly impacted broader global markets. Without an effective capacity reduction plan in coming years, severe overcapacity in China will continue to harm the global steel industry.
- 27. Risk Factors Overcapacityin the global steel The Steel industry remains greatly constrained by the impact of global overcapacity. Weak economic conditions in Europe, slow growth in China and a strong U.S. dollar relative to other foreign currencies continue to make the U.S. markets a prime target for foreign steel imports. The rapid and significant increase in steel production in developing countries has led to dangerous levels of overcapacity that have significantly impacted broader global markets. Without an effective capacity reduction plan in coming years, severe overcapacity in China will continue to harm the global steel industry. For the last few years, the U.S. steel market has been besieged by a flood of imported steel, much of it illegally subsidized in violation of trade laws. These imports drove down both capacity utilization rates and steel prices. This overcapacity and the slowdown in demand in China have resulted in a further increase in imports of artificially low-priced steel and steel products to the United States and world steel markets. Steel and steel products which would otherwise have been consumed by the local steel customers could then be displaced into global markets, putting Nucor’s steel and steel products at a competitive disadvantage.
- 28. Risk Factors Competitionfrom other producers, imports or alternative materials There is strong competition from other steel producers and imports that compete with Nucor’s products on price and service. The steel markets are highly competitive and a number of firms, domestic and foreign, participate in the steel and raw materials markets. In many applications, steel competes with other materials, such as concrete, aluminum, composites, plastic and wood. Increased use of these materials in substitution for steel products could have a material adverse effect on prices and demand for Nucor’s steel products. Since 2011, automobile producers have begun taking steps towards complying with new Corporate Average Fuel Economy mileage requirements for new cars and light trucks that they produce. As automobile producers work to produce vehicles in compliance with these new standards, they may reduce the amount of steel or begin utilizing alternative materials in cars and trucks to improve fuel economy.
- 29. Risk Factors Nucor’soperations are sensitive to volatility in steel prices and the cost of raw materials Nucor relies to an extent on outside vendors to supply them with raw materials, including both scrap and scrap substitutes that are critical to the manufacture of their products. Although they have vertically integrated their business by constructing our DRI facilities in Trinidad and Louisiana and also acquiring DJJ, they still must purchase most of our primary raw material, steel scrap, from numerous other sources located throughout the United States. Prices of these critical raw materials are volatile and are influenced by changes in scrap exports in response to changes in the scrap, scrap substitutes and iron ore demands of our global competitors. Many countries that export steel into US markets restrict the export of scrap, protecting the supply chain of some foreign competitors. This trade practice creates an artificial competitive advantage for foreign producers that could limit Nucor’s ability to compete in the U.S. market.
- 30. Risk Factors Changesin the availability and cost of electricity and natural gas are subject to volatile market conditions Nucor’s steel mills are large consumers of electricity and natural gas. In addition, our DRI facilities are also large consumers of natural gas. Nucor relies upon third parties for the supply of energy resources consumed in the manufacture of their products. The prices for and availability of electricity and natural gas are subject to volatile market conditions. Increases in their energy costs resulting from regulations that are not equally applicable across the entire global steel market could materially adversely affect their business.
- 31. Problem Statement How canNucor Sustain economic growth and competitive advantage in a market saturated by global overcapacity?
- 32. Recommendations/Alternatives a. International Expansion– Joint Venture i. Mitigates the risk associated with the US Market and it’s cyclical traits ii. Helps open up new markets of opportunities and lessens dependence on US Market. iii. Nucor has prior experience with establishing successful joint ventures iv. Potential to establish new suppliers through market or business partner in the joint venture. v. Further increases bargaining power over suppliers vi. Potentially could speed the development of new technologies and or product innovations, allowing Nucor to keep its competitive advantage as a low cost producer. b. Acquisitions – Domestic Expansion i. Due to the Global Overcapacity, much of the American Steel Industry is cash-flow negative at current steel prices, allowing for acquisitions at bargain prices. ii. Competitiveness - staying ahead of domestic rivals iii. Potentially better off purchasing existing plant capacity and retrofitting with new equipment then building new capacity. iv. Strengthen Nucor’s customer base, geographic coverage and lineup of product offerings c. Continue expanding product portfolio to include more value-added i. The development of innovative value-added steel products will be a necessity as the broader supply chain and other industries look for ways of optimizing their own • For instance, automotive manufacturers seek materials that are lightweight yet robust to increase mileage and absorb energy on impact, while oil and gas majors require steel products that can withstand demanding extraction conditions ii. Value-Added Products command higher prices and yield better profit margins d. Align with US Steel Manufacturers and the US Department of Commerce to enforce Trade Laws and various organizations to combat global steel production overcapacity. i. U.S. steel producers have been fighting back by filing trade cases to ensure our trade laws are ii. Nucor thrives in a marketplace where winners are determined by real economic advantage, not advantages derived by artificial or illegal means iii. Strong trade enforcement should result a decrease in Steel imports which would result improved margins for U.S. steelmakers. iv. iv. Work with steel associations, NAFTA partners, the Organization for Economic Cooperation and Development and the G20 to develop a plan to reduce excess capacity.
- 33. Best Solution –Combination A & D a. International Expansion – Joint Venture i. Mitigates the risk associated with the US Market and it’s cyclical traits ii. Helps open up new markets of opportunities and lessens dependence on US Market. iii. Nucor has prior experience with establishing successful joint ventures iv. Potential to establish new suppliers through market or business partner in the joint venture. v. Further increases bargaining power over suppliers vi. Potentially could speed the development of new technologies and or product innovations, allowing Nucor to keep its competitive advantage as a low cost producer. d. Align with US Steel Manufacturers and the US Department of Commerce to enforce Trade Laws and various organizations to combat global steel production overcapacity. i. U.S. steel producers have been fighting back by filing trade cases to ensure our trade laws are ii. Nucor thrives in a marketplace where winners are determined by real economic advantage, not advantages derived by artificial or illegal means iii. Strong trade enforcement should result a decrease in Steel imports which would result improved margins for U.S. steelmakers. iv. iv. Work with steel associations, NAFTA partners, the Organization for Economic Cooperation and Development and the G20 to develop a plan to reduce excess capacity.