Situation Analysis Nuclear Corporation of America was renamed as Nucor in 1972. Then President F.

Kenneth Iverson was responsible for driving profitability from building a modern minimill to make steel from scrap. By 1986, the US -based steel making company Nucor, under the leadership of current CEO F. Kenneth Iverson became the second most productive steel maker in the world based on the annual tonnage per employee (behind) (ahead of). Nucor has the core competency in being the most innovative steel making company. Nucor has the experience to build steel plants economically and operate them efficiently to make profits. Ken Iverson is contemplating his decision to invest in a new thin slab steel producing procedure. SMS, a leading West German supplier of steel making equipment is working to introduce a new thin slab steel making product and operation. This new procedure, which SMS named Compact Strip Production (CSP), will provide cost savings relative to conventional casting pertained to the casting operation. CSP only requires four rolling stands to be crushed into flat sheet instead of the 7-10 stands that were traditionally required for thicker slabs at integrated mills. This process leads to labor and energy savings that would drop costs below that of the U.S. integrated mills. (However, these were just projections.) Nucor can penetrate to the low-end of the flat sheet market by building the new thin slab Minimill. Nucor has earlier seen benefits in investing on technological developments to maintain quality output and upgrading its old Minimills in order to increase their capacity in production.

Problem Over the past years domestic shipping of steel has been affected by imported steel products. All U.S. steel produces have been taking a hit from the growing competitive market. Nucor has also seen an increase in overhead because they have become less able to supply themselves with all of the steel necessary, including flat rolled sheets, to produce their final products. In the past Nucor has been able to keep internal costs down by producing the materials required in steel production. Nucor has committed to a joint venture with Japanese producer of wide-flange beams, Yamato Kogyo. This partnership with Yamato Kogyo will allow Nucor enter high-end of the construction market. In order to pursue both projects simultaneously Nucor would have to invest up to $410 million over a three year period. Technological leapfrogging is also a concern for CEO Iverson. The proposed thinslab casting procedure is known to be obsolete in 10-12 years.