Executive Summary
Nucor’s strategy is that of a low cost provider in the Steel US market, they know they are selling a commodity and understand their competitive edge in the industry is lowering prices through innovation and productivity. Nucor has managed to excel in the steel industry for the past five years. Gaining market share through acquisitions and developing new joint ventures to develop new lower-cost efficient technologies.
However, steel production capacity was exceeding the market demand and foreign steel producers found reliable and effective way to fight with global steel excess. Subsidized by the governments they were dumping U.S market at the throat-cutting rates. The lack of protection is a high risk factor and makes the industry even more attractive to foreign producers.
The stable demand in the US steel market combined with the high labor cost creates favorable conditions for foreigners. The market concentration is increasing with new players brining more capacity on line due large mergers and new technologies with lower-cost efficiency.
Nucor has been advances in the market tendency and had being consolidating various acquisitions and joint ventures to develop new technologies. But steel remained as a local player in the US market, facing global competition and lacking in 70% of their own raw material supply.
To compete in this new scenario, Nucor needs to address its efforts at three important issues:
1. Globalizing its operation, to have access to lower-cost in labor in developing countries using their efficient work practices and to protect from currency fluctuation.
2. Raise the percentage of contracts to their production to protect from fluctuations of steel product price and gain market share within the US mark ...