Nucor steel – a mini and micro success story

 

To elaborate on the scale-reduction and dispersed operation of production and its impact on the firm performance and employee productivity, a brief on strategy, structure and culture of Nucor is presented here (www.nucor.com). Nucor – a well-known steel producer and recycler in the United States – has a production capacity of 26 million tons.

 

Nucor’s philosophy matches with the maxim “small is beautiful” and believes they have gotten big by thinking small. While most of the steel manufacturers use large integrated steel mills, Nucor pioneered with mini- and micro-mills. These mills are far more efficient as compared to the integrated plants. They account for the majority of Nucor’s steel production. Nucor also introduced a single-step process of producing steel slabs that dramatically reduced the time, space, manpower and energy needed to produce high-end steel. Its corporate headquarters are in Charlotte, North Carolina, and it runs approximately 200 operating facilities throughout North America. Most of these facilities are located in rural areas, capitalizing on the high work ethic of the residents there.

 

A multibillion-dollar firm, yet with 95 people working at its corporate headquarters and surprisingly few layers of management from the CEO to the frontline worker, provided rich rewards to its employees, including hourly workers. This company consists of 90 businesses that operate independently, but compete collectively. It resembles a family of small firms as compared to a large corporation. It has an unusually active and free exchange of ideas and solutions across its divisions and departments. Its managers have a high level of discretion to run its facilities and meet the needs of their customers.

 

Research is an everyday activity in this company for every employee, which has made this company the innovation leader in its industry. Nucor believes employees, not managers, drive its success. At Nucor, there is a phrase “Push decision-making down to the lowest level” so its employees can feel ownership in the company. Managers at Nucor believe that employees become more productive when they make most of the decisions. In this firm, “empowerment” has gone beyond a corporate buzzword. Nucor employees believe that if they have a suggestion, their ideas will not get buried in bureaucracy. Nucor allows for any employee to ask for a review of the complaint in an expeditious manner, if he or she has not received a fair hearing. The firm claims its unconventional thinking has yielded superb results, in terms of avoiding layoffs for lack of work, and over the past five years, 371 per cent return to shareholders, beating all other firms at Standard and Poor’s 500 stock index.

 

Nucor’s overall success in terms of cost savings, quality, innovation, employee learning and productivity, and overall effectiveness in terms of financial and operational performance attest to the significance and consequence of scale reduction and dispersion of organization and production systems.