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Nucor Corporation 1995: after 30 years of success, what next?

The Nucor story is about how a nearly bankrupt enterprise became the most productive and

profitable company in the U.S. steel industry. It is also a story of how the two top managers of

Nucor Corporation set a standard of personal and corporate behavior that continues to inspire

social and economic civility within and beyond U.S. borders.

The change in fortunes for the company began in the summer of 1965, when the new Chairman

of the Board, Donald Lillis, asked the financial manager Sam Siegel to stay on rather than quit.

Siegel responded with two conditions: appoint Ken Iverson president and himself, Sam Siegel,

treasurer and secretary. The Board agreed, and the new top management team of Iverson and

Siegel came into being. They believed that customers ought to receive good value and

productive employees ought to be rewarded, and they saw to it that this happened. By 1974, just

nine years from almost certain bankruptcy, the two top managers sensed the company would

become “unstoppable”. However, it would be another 20 years before Nucor was recognized as

a “great” company with amazing returns (Collins 2001). For example, between 1965 and 1995

Nucor returned 3 times more on invested capital than General Electric under “super manager”

Jack Welch (Appendix 1, p.27 summarizes Nucor’s financial position in 1965 and 1995).

According to Samuel Siegel, the greatest difference between 1965 and 1995 was not in the

financial figures but, rather, in the recommendation for top manager. In 1965, Sam Siegel had

no doubt about his recommendation to Donald Lillis, Chairman of the Board, that Ken Iverson

be appointed top manager. Sadly, in 1995 he had no such confidence about the person who most

likely would be recommended as Ken Iverson’s successor. As a member of the Board, Siegel

was obligated to offer his opinion. What would he say?

* This case study on the Nucor Corporation was written with the valuable assistance of Samuel Siegel, retired

vice-chairman, chief financial officer, treasurer and secretary, Nucor Corporation for purposes of research,

theory development and classroom discussion. It was written by Bryan Poulin, associate professor in strategy

and ethical leadership, Faculty of Business Administration, Lakehead University, Ontario, Canada. Thanks go

to people interviewed, and who reviewed earlier versions, namely: James M. Coblin, vice-president of human

resources, Nucor Corporation; Ted Kelly, retired lead man, Darlington, South Carolina rolling mill shop, Nucor

Corporation, and his wife, Alice Kelly, homemaker; Betsy Liberman, secretary-receptionist, Nucor Corporation;

and Samuel Siegel, retired vice-chairman and chief financial officer, Nucor Corporation. Finally thanks go to

Robert Willis for his early review and suggestions, to Arlene Smith and Lauree Poulin for the many days spent

drafting and redrafting the manuscript, and to students at Lakehead University who first tested this Nucor case

(latest revision September 2008, 210). Copyright held by author

Background

The story of Nucor can be traced to 1891 when Ransom E. Olds was awarded a patent for his

steam engine. In 1893 Olds was first to export a U.S. made automobile, his steam-powered

Oldsmobile, to a London firm. In 1904 the company he founded, Olds Motors Works, had

become the largest automobile manufacturer in the U.S. This was the same year that R. E. Olds

sold his shares in Olds Motor Works and he began manufacturing cars with the Reo (from his

initials) Motor Car Company. The Oldsmobile brand was later sold to General Motors in 1908.

R.E. Olds filed for bankruptcy in 1938, near the end of the Great Depression, and the Reo Motor

Car Company was reorganized under Reo Motors to manufacture light trucks named “Reo

Speedwagons”. Demand for light trucks was driven by U.S defense contracts, first during World

War II and again during the Korean War. Demand fell when the Korean War ended in 1953. In

1954 Reo Motors was sold to Diamond Trucks and truck manufacturing carried on under the

“Diamond Reo” brand. A new company, Reo Holdings, was formed to hold the proceeds of the

sale and distribute these proceeds to the shareholders of Reo Motors.

Nuclear Corporation of America, later renamed Nucor, came into being with the 1955 merger of

what remained of Reo Holdings – before all proceeds had been distributed – and a company

called Nuclear Consultants. Nuclear Consultants had been “… vaguely formed to capitalize on

the possibilities of nuclear power” (Rodengen, 1997, p. 16). The merged Nuclear Corporation of

America drifted along until the Board chose Dave Thomas, a flashy and articulate manager of

questionable standards, to head the company in 1960. Thomas traveled about the country in

style in his own private plane that he leased to the company. He soon arranged a move of the

company headquarters from the small office in New Jersey to spacious offices in Phoenix,

Arizona. Thomas then set about directing the 31-year old certified public accountant Sam

Siegel, hired in 1961, to acquire businesses in rapid succession, following the “growth by

acquisition” folly of the 1960s. However, only one acquisition proved worthwhile and that was

Vulcraft, a South Carolina company that manufactured steel joists, the assemblies that support

the floors and roofs of industrial and commercial buildings. Thomas knew nothing about joists

but, fortunately, Nuclear Corporation hired Ken Iverson.

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Nucor Corporation 1995: after 30 years of success, what next? The Nucor story is about how a nearly bankrupt enterprise became the most productive and profitable company in the U.S. steel industry. It is also a story of how the two top managers of Nucor Corporation set a standard of personal and corporate behavior that continues to inspire social and economic civility within and beyond U.S. borders. The change in fortunes for the company began in the summer of 1965, when the new Chairman of the Board, Donald Lillis, asked the financial manager Sam Siegel to stay on rather than quit. Siegel responded with two conditions: appoint Ken Iverson president and himself, Sam Siegel, treasurer and secretary. The Board agreed, and the new top management team of Iverson and Siegel came into being. They believed that customers ought to receive good value and productive employees ought to be rewarded, and they saw to it that this happened. By 1974, just nine years from almost certain bankruptcy, the two top managers sensed the company would become “unstoppable”. However, it would be another 20 years before Nucor was recognized as a “great” company with amazing returns (Collins 2001). For example, between 1965 and 1995 Nucor returned 3 times more on invested capital than General Electric under “super manager” Jack Welch (Appendix 1, p.27 summarizes Nucor’s financial position in 1965 and 1995). According to Samuel Siegel, the greatest difference between 1965 an ...
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