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[Asian Steel Watch] Vol.3 (2017.6)

[Asian Steel Watch] Vol.3 (2017.6)

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Interview Beyond Survival to Success

  • WriterJohn J. Ferriola
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John J. Ferriola, Chairman, Chief Executive Officer and President of Nucor Corporation, Chairman of worldsteel talked 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’s largest steel producer and recycler with an annual production capacity of 26 million tons. We operate 25 scrap-based steel production mills in 17 U.S. states.
  • Our 24,000 teammates are the company’s greatest asset. We are all dedicated to taking care of our customers by being the safest, highest quality, lowest cost, most productive and most profitable steel and steel products company in the world. We give them a great deal of freedom to make decisions about how they should run their mills. This decision making authority, along with our pay-for-performance incentive pay system, helps drive innovation.
 
2) Technological prowess that Nucor has achieved so far
  • Nucor’s history is one of those that changed the U.S. steel industry through innovation. In 1969, we began operating our first electric arc furnace (EAF) steel mill. Many people thought we would only be able to make the most basic types of steel by using scrap metal, but throughout our history we have proved the skeptics wrong. Today, we are North America’s most vertically-integrated and diversified steel company.
  • Our desire to control more of our raw materials supply and cost led us to build our two DRI plants.
  • The secret of our success in continually innovating is our teammates and our culture. We empower our teammates to make decisions and they drive many of the ideas for improving our operations. Our production incentive bonuses mean that teams are always looking for ways to be more efficient, improve productivity, and develop new products.
 
3) The recent status and mid-to-long term forecast of the U.S. steel industry
  • The U.S. steel market has been under tremendous pressure from imports the last few years. In 2016, imports were down by 15% compared to the prior year. Imports captured 26% market share, which was down from a record high of 29% in 2015. However, the average capacity utilization rate in 2016 was 71%, still well below the 87% utilization rate 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 see energy-related steel demand begin to turn around, While we expect automotive steel demand to 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 North American steel industry, is one of constant innovation and exploration of new, more competitive and cleaner ways to make steel. Innovation and technology have transformed America’s steel industry into one of the world’s most competitive, sustainable, and environmentally progressive industries.
  • Nucor is also using data to better inform our operations and customer service. We have grown our product offerings and can supply customers with most of their steel needs. To help facilitate that and share information across Nucor facilities, we are in the process of implementing a new information software system.
 
6) The current major issues facing the global steel industry
  • Steel production overcapacity, and unfair foreign trade that results from it, is the number one issue facing the global steel industry.
  • The U.S. steel industry has been aggressive in pursuing trade cases and we have scored a number of important victories. We have been working with our international partners to address overcapacity. We also need a timeline for capacity reductions by China and a mechanism to verify that the reductions have actually occurred.
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