John J. Ferriola, Chairman, Chief Executive Officer and President of Nucor Corporation, Chairman of worldsteeltalked to Asian Steel Watch about his company, the U.S. steel industry and global steel industry including : 1) Nucor’s business, core value, and vision, 2) technological prowess that Nucor has achieved so far, 3) the recent status and mid-to-long term forecast of the U.S. steel industry, 4) Nucor’s long-term strategy to overcome challenges in the steel industry, 5) the impact of advanced technologies, such as IoT, big data, and 3D printing, on the steel industry and implementation of Industry 4.0 in Nucor, and 6) the current major issues facing the global steel industry.
1) Nucor’s business, core value, and vision
Nucor Corporation is North America’slargest steel producer and recycler with an annualproduction capacityof 26 million tons. We operate 25 scrap-basedsteel production mills in 17 U.S.states.
Our 24,000 teammates are the company’sgreatest asset. We are all dedicated to takingcare of our customers by being the safest,highest quality, lowest cost, most productiveand most profitable steel and steel productscompany in the world. Wegive them a great deal of freedom to makedecisions about how they should run theirmills. This decision making authority, alongwith our pay-for-performance incentive paysystem, helps drive innovation.
2) Technological prowess that Nucor has achieved so far
Nucor’s history is one of those thatchanged the U.S. steel industry through innovation.In 1969, we began operating ourfirst electric arc furnace (EAF) steel mill. Many people thought we would only be able to make the most basictypes of steel by using scrap metal, butthroughout our history we have proved theskeptics wrong. Today, we are North America’smost vertically-integrated and diversifiedsteel company.
Our desire to control more of our raw materialssupply and cost led us to build ourtwo DRI plants.
The secret of our success in continuallyinnovating is our teammates and our culture.We empower our teammates to make decisionsand they drive many of the ideas forimproving our operations. Our production incentivebonuses mean that teams are alwayslooking for ways to be more efficient, improveproductivity, and develop new products.
3) Therecent status and mid-to-long term forecast of the U.S. steel industry
The U.S. steel market has been under tremendouspressure from imports the last fewyears. In 2016, imports were down by 15%compared to the prior year. Imports captured26% market share, which was down from a record high of 29% in 2015. However,the average capacity utilization rate in 2016was 71%, still well below the 87% utilizationrate the industry enjoyed in 2007.
We expect the U.S. economy and steel demand will improve in 2017. Non-residential construction, a major market for Nucor products, looks poised to regain momentum. With oil prices rising, we could seeenergy-related steel demand begin to turnaround, While we expect automotive steel demandto level off.
4) Nucor’s long-term strategy to overcome challenges in the steel industry
Our long-term strategy for profitable growth is built around five drivers: ① strengthening our position as the low cost producer; ② achieving the market leadership position in each product area where we compete; ③ expanding our capability to produce higher-margin, value-added products; ④ leveraging our downstream channels to market; and ⑤ achieving commercial excellence.
5) The impact of advanced technologies, such as IoT, big data, and 3D printing, on the steel industry and implementation of Industry 4.0 in Nucor
The history of Nucor, and the NorthAmerican steel industry, is one of constantinnovation and exploration of new, morecompetitive and cleaner ways to make steel. Innovation and technology have transformedAmerica’s steel industry into one ofthe world’s most competitive, sustainable,and environmentally progressive industries.
Nucor is also using data to better informour operations and customer service. Wehave grown our product offerings and cansupply customers with most of their steelneeds. To help facilitate that and share informationacross Nucor facilities, we are in theprocess of implementing a new informationsoftware system.
6) The current major issues facing the global steel industry
Steel production overcapacity, and unfairforeign trade that results from it, is thenumber oneissue facing the global steelindustry.
The U.S. steel industry has been aggressivein pursuing trade cases and we havescored a number of important victories. We have been working with our internationalpartners to address overcapacity. We also need a timelinefor capacity reductions by China and amechanismto verify thatthe reductions have actuallyoccurred.