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| The Nucor Story |
| Nucor Corporation has received a great deal of attention in the
business media in recent years because of its success in an industry beset by a multitude
of problems. |
| Nucor has been able to remain a growing, profitable steel and steel
products producer, because Nucor's work force is strongly committed to Nucor's basic
philosophy - to build steel manufacturing facilities economically and to operate them
productively. |
| Nucor Corporation has rewarded its employees in return with a compensation program
directly linked to productivity and with the commitment to continue to provide opportunity
tomorrow for the people who are doing the job today. |
| This page will tell you the Nucor Story - it will explain Nucor's management
philosophy and its operating style. But the real Nucor Story is the 6,000 employees who
work hard to keep Nucor a leader in its industry. |
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| Nucor's History |
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| As one of the nation's largest steel producers with more than $3.5 billion in sales,
Nucor can trace its origins to auto manufacturer Ransom E. Olds, who founded Oldsmobile
and then Reo Motor Cars. Through a series of transactions, the company Olds founded
eventually became the Nuclear Corporation of America, a company involved in the nuclear
instrument and electronics business in the 1950's and early 1960's. |
| Nucor suffered through several money-losing years, and when facing bankruptcy in 1965,
installed Ken Iverson as President and Sam Siegel as Financial Vice President. This change
in management led to a restructuring and a decision to rebuild Nucor around the major
profitable operations, which made steel joists in Florence, South Carolina and Norfolk,
Nebraska. |
| Nucor moved its corporate headquarters from Phoenix, Arizona to Charlotte, North
Carolina in 1966, and in 1972 adopted the Nucor name. Management then directed its
energies toward two basic businesses - the steel joist business, operated as Vulcraft, and
the steel business, operated as Nucor Steel. Today Vulcraft is the nation's largest
producer of steel joists and steel girders, standard building components in
non-residential construction. Nucor Steel has become well-recognized for its modern steel
making techniques that can produce steel at a cost competitive with steel made anywhere in
the world. |
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| Nucor Locations |
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| A major ingredient in Nucor's success has been its commitment to locate its diverse
facilities in rural locations across America. |
| As a result of deliberately selecting non-urban locations, Nucor has been able to
establish strong ties to its local communities and its work force. The ability to become a
leading employer and pay a leading wage has been key to attracting hard-working, dedicated
employees. This ability has also enabled Nucor to choose among states more committed to
maintaining a climate conducive to business growth through reasonable tax structures, and
hospitable to Nucor's commitment to remain union-free. Nucor and its subsidiaries today
consist of these nine businesses, serving specific targeted markets. |
- Nucor Steel
- Products: Steel sheet, bars, angles, light structural carbon and alloy steels.
- Nucor-Yamato Steel Company
- Products: Wide flange steel beams, pilings, heavy structural steel products.
- Vulcraft
- Products: Steel joists, joist girders and steel deck for building construction.
- Nucor Cold Finish
- Products: Cold finished steel products for shafting and precision machined parts.
- Nucor Fastener
- Products: Standard steel hexhead cap screws, hex bolts and socket head cap screws.
- Nucor Building Systems
- Products: Metal buildings and metal building components.
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| Nucor's Management Philosophy |
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| Nucor states its basic philosophy in this way - Nucor builds steel
manufacturing and steel products facilities economically and operates them productively.
Underlying this simple objective is an organizational structure that is decentralized,
consisting of only four management layers as follows: |
Chairman / Vice Chairman / President
Vice President / General Manager
Department Manager
Supervisory / Professional
Hourly Employee |
| This streamlined chain of command provides the general managers at each
Nucor facility with a great deal of autonomy in operating the facility as an independent
business. |
| With the day-to-day decisions made at the operating facilities, Nucor is
able to solve problems quickly without waiting for a decision from headquarters. Thus,
Nucor keeps the lines of communication open to employees in an informal, efficient manner.
Employee relations at Nucor are based on four clear-cut principles: |
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- Management is obligated to manage Nucor in such a way that employees will have the
opportunity to earn according to their productivity.
- Employees should feel confident that if they do their jobs properly, they will have a
job tomorrow.
- Employees have the right to be treated fairly and must believe that they will be.
- Employees must have an avenue of appeal when they believe they are being treated
unfairly.
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| This basic operating philosophy has paid off with Nucor employees
producing at the highest rates in the industry and earning wages as high as any comparable
industrial business. As part of its commitment to fairness, Nucor has a grievance
procedure that allows any employee to ask for a review of a grievance if he or she feels
the supervisor has not provided a fair hearing. The procedure lets the grievance move up
to the general manager level, and if the employee is still not satisfied, the grievance
can be submitted to headquarters management for final appeal. By implementing these four
basic principles, Nucor has set an employee relations tone that has served both management
and employees well. |
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| Performance Based Compensation for
Goal-Oriented People |
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| Nucor provides employees with a unique performance-related compensation
system that rewards goal-oriented employees. All employees are covered under one of four
basic compensation plans, each featuring incentives related to meeting specific goals and
targets. |
| These compensation plans work as follows: |
| Production Incentive Plan |
Employees involved directly in manufacturing are paid weekly bonuses on the basis of
the production of their work groups, which range from 20 to 40 workers each. Most Nucor
employees are covered under this system. Typically, these bonuses are based upon
anticipated production time or tonnage produced, depending upon the type of facility. The
formulas for determining the bonus are non-discretionary, based upon established
production goals. This plan creates pressure for each individual to perform well and, in
some facilities, is tied to attendance and tardiness standards. No bonus is paid if
equipment is not operating, thus creating a strong emphasis on maintaining equipment in
top operational condition at all times. Maintenance personnel are assigned to each shift,
and they participate in the bonus along with the other bonus groups. Production
supervisors are also a part of the bonus group and receive the same bonus as the employees
they supervise. In general, the Production Incentive bonus can average 80-150 percent of
the base wage.
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| Department Manager Incentive Plan |
Nucor Department Managers earn incentive bonuses paid annually based primarily upon the
return on assets of their facility. Nucor pays no discretionary bonuses. All facilities
have a common and clear goal since Department Manager bonuses are based upon written plans
that are easy to understand. These bonuses can be as much as 82 percent of base salary.
|
Non-Production and
Non-Department Manager Incentive Plan |
This bonus is paid to all employees not on the Production Incentive Plan or the
Department Manager Incentive Plan. Its participants include accountants, engineers,
secretaries, clerks, receptionists or any one of a broad number of different employee
classifications. The bonus is based primarily upon each facility's return on assets. As
with all Nucor incentive compensation bonus plans, there are no discretionary bonuses paid
to participants. The bonus is based on a written plan that is clear, easy to understand
and accessible to employees. Every month each operation receives a report showing on a
year-to-date basis their return on assets. This chart is posted in the employee cafeteria
or break area together with the chart showing the bonus payout. The chart keeps employees
appraised of their expected bonus levels throughout the year. This bonus can total over 25
percent of salary.
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| Senior Officers Incentive Plan |
Nucor senior officers do not have employment contracts. They receive no profit sharing,
pension, discretionary bonuses nor retirement plans. Their base salaries are set at less
than what executives receive in comparable companies. Senior officers have only one
compensation system. A significant part of each senior officer's compensation is based
upon Nucor's return on stockholder's equity, above certain minimum earnings. A portion of
pre-tax earnings is placed into a pool that is divided among the officers in bonuses that
are about 60% stock and 40% cash. If Nucor does well, the officer's compensation is well
above average, as much as several times base salary. If Nucor does poorly, the officer's
compensation is only base salary and, therefore significantly below the average pay for
this type of responsibility.
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| In addition to these established bonus plans, Nucor periodically issues
an extraordinary bonus to all employees, except officers, during times when Nucor is
enjoying a particularly strong performance. This bonus has been as high as $800 for each
employee. |
| Overall, Nucor's incentive compensation programs offer each and every
employee an opportunity to share directly in Nucor's success. It provides strong
encouragement for employees to work hard to build a better future for Nucor and
themselves. |
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| Egalitarian Benefits |
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| Nucor takes an egalitarian approach in providing benefits to its
employees. Senior executives do not enjoy traditional perquisites such as company cars,
corporate jets, executive dining rooms, or executive parking places. In fact, certain
benefits such as Nucor's Profit Sharing, Scholarship Program, Employee Stock Purchase
Plan, Extraordinary Bonus, and Service Awards Program are not available to Nucor's
officers. All employees have the same holidays, vacation schedules and insurance programs.
This equality in benefits is a key ingredient toward fostering the teamwork approach that
is an essential part of Nucor's business. |
| Nucor maintains a Profit Sharing Plan for employees below the officer
level. Employees make no contributions to this plan. A minimum of 10 percent of Nucor's
pre-tax earnings is contributed to the Profit Sharing Plan each year. Of this amount
approximately 15 to 20 percent is paid to employees in March of the following year as cash
profit sharing. The remainder is placed in trust and allocated to employees based upon
their earnings as a percent of the total earnings paid throughout Nucor. Employees become
fully vested in their portion of the Profit Sharing Trust after seven full years of
service. Profit Sharing Trust funds are paid to employees when they retire, or terminate
employment with Nucor. A number of employees have over $300,000 in the Profit Sharing
Trust. |
| Nucor also offers employees a chance to invest in their future with a
Monthly Stock Purchase Plan featuring a 10 percent Nucor matching contribution; and a
401(k) Retirement Savings Plan including a matching contribution ranging from 5 percent to
25 percent of the employee's contribution based upon Nucor's return on shareholder's
equity. Nucor provides its employees with standard types of medical, dental, disability
and life insurance programs, as well as standard vacation and holiday packages. |
| Nucor's Service Award Plan grants employees an award of five shares of
Nucor common stock for each five years of continuous service. |
| A unique aspect of Nucor's benefit program is its commitment to education
for children of Nucor employees. The Nucor Scholarship Program provides four-year
scholarships for children of Nucor employees pursuing higher education or vocational
training past high school. The program pays up to $2,500 annually for each qualified
student. |
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| Building Teamwork for the Future |
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| With a well-balanced benefit program, incentive bonus plans, clear-cut
employee relations principles and a streamlined management style, Nucor creates a teamwork
spirit with its employees to build a better future. |
| Indicative of this teamwork emphasis is a cornerstone of Nucor's employee
relations program, the annual employee dinners held at each facility. |
| General Managers are charged with responsibility to hold annual dinners
with every employee in groups of 25 to 100 at one time. These meetings give employees a
chance to discuss problems relating to scheduling, equipment, organization and production.
The ground rules for these meetings are simple: all comments are to remain
business-related and not involve personalities, and all criticism is to be taken under
advisement by management for decisive action. Like New England town meetings of old, the
format is free and open. Topics can vary widely from year to year. Sessions last well
beyond midnight in some instances. |
| In a similar manner, the general managers meet with headquarters
management in February, May, and November of each year to review each facility's
performance and to plan for the months and years ahead. |
| A Commitment to Uncompromising Quality, Responsive Service and
Competitive Pricing. Through continuous innovation, modern equipment, dedication to the
customer, and concentration on productivity from a highly motivated work force, Nucor has
distinguished itself as a leading producer of quality steel and steel products. Nucor
plants and employees are committed to providing customers with the highest quality levels
at the most competitive prices. And, while steel and steel products are Nucor's business,
the real business of Nucor is its commitment to each and every customer on each and every
order. |
| A Commitment to Technological Leadership. Nucor's strong emphasis on
employee communication and commitment carries with it the commitment to provide the work
force with the best technology available to get the job done right in a safe working
environment. As evidence of that commitment, Nucor aggressively pursues the latest
advancements in steel making around the world to determine what technology it can adapt in
its facilities. |
| This pursuit of technical excellence has led to the development of
Nucor-Yamato Steel Company, a facility jointly-owned by Nucor and Yamato Kogyo of Japan,
which operates a structural steel mill in the United States employing Yamato's continuous
casting technology. |
| In addition, the Nucor Steel mini-mills in Crawfordsville, Indiana;
Hickman, Arkansas; and Charleston, South Carolina; represent a revolution in the thin slab
casting process that produces flat-rolled sheet steel. This new technology, developed by a
West German company, saves as much as $50 to $75 per ton over the costs incurred by
conventional mills making the same products. |
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| Facing the Future |
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| Eliminating the distinctions between management and hourly employees as
much as possible serves Nucor well. Nucor's employees respond positively to Nucor's
production incentives. In return, Nucor remains strongly committed to not laying off or
furloughing employees in periods when business is down. During the past twenty years,
Nucor has not laid off a single worker due to lack of work. The result is a committed team
of Nucor employees that looks ahead to a bright future. |
| The expansion program started in the mid-1980's assures that Nucor is
well-positioned to develop fresh markets for steel products far into the twenty-first
century. |
| With a strong financial position and a highly-dedicated,
highly-productive work force, Nucor faces the future with confidence and an eager
anticipation of continued higher earnings and robust growth. |
