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Company profile: Nucor Steel.

You can't blame Nucor Corp. for gloating a bit. The Charlotte, N.C.-based steel manufacturer's revolutionary thin-slab casting process had never been used commercially. And the company's new $300 million plant, located just south of Crawfordsville, was admittedly a gamble.

Even the West German firm that supplied the technology was skeptical, recalls Keith Busse, Nucor vice president and general manager. "They told us: 'Don't get too excited about th is project. It takes ]8to 24 months to get any new steel mill to a break-even posture or profitable state, so with a new technology, don't expect to do it in a time frame any shorter. We doubt it's going to happen.'"

But it did happen. Production capacity has been near 100 percent since June, when the Crawfordsville plant recorded its first month of profit. Employment exceeded 400 and the sales book is full through the end of this year. Nucor's 1 million ton per year production goal should be reached early in 1991. "We've far exceeded everyone's expectations," Busse says.

There were, however, many obstacles along the road to success, Busse concedes. The first was finding a successful thin-slab steel casting process, a challenge that dates back some I 00 years.

"Researchers have known for years that if you could cast a thin slab, you'd end up with superior metallurgical properties because of the rapid solidification and very fine grain structure the process produces," Busse explains. "It's something people in the steel industry have had an interest in for a long period of time, but there's just never been technology available to produce high-quality end results."

Nucor experimented with its own thin-slab casting process in the early 1980s, but quality and maintenance concerns slowed the development, Busse says. Others encountered similar obstacles. "The Japanese and Italians were fooling around with a couple different processes, and U.S. Steel, Bethlehem Steel and the U.S. Department of Energy had been experimenting with a thin-slab caster for a number of years without achieving any substantial success," he says.

When West Germany's SMS finally achieved positive results in 1986, Nucor quickly purchased the technology, Busse says. The biggest challenge, though, was still ahead. "We had evaluated the process but there was no commercial facility operating anywhere in the world."

The first step was finding a suitable site for the facility. The search began in the South, but was quickly shifted to the Midwest, Busse says. "A study we did indicated that 60 percent of all the sheet and plate-steel consumption in the nation revolved around Michigan, Ohio, Kentucky, Indiana and illinois, so we wanted to be in the heart of the marketplace," he explains.

It also was decided early in the search process that the new plant would be located in a rural area. "That's our personality, " Busse says. "All of our facilities are located in rural communities. We tend to believe that their work ethic is stronger and that their attitudes are more philosophically aligned to our corporate goals, policies and practices."

Nucor's commitment to rural America posed some problems, though. "The site selection became monumentally more difficult because all the major railroads and power lines flow to the big cities, and those were the key elements, Busse says. "You might find the power line, but only one railroad and no highway. You can't just go anywhere and locate a facility like this."

After abandoning Kentucky and Michigan in its search, Nucor focused on 0hio, Indiana and Illinois. "We had about the same infrastructure packages offered by each state, so that wouldn't have lured us to one location or another," Busse says. "It then became a question of which state government was the most fiscally responsible and the most conservative.

"We tend to be risk-takers ourselves-and are very progressive technologically and in management-yet financially we operate our company from a very conservative posture," he explains. "We wanted the same things in state government.'

Following months of evaluation, Nucor finally found the perfect site. But it wasn't Crawfordsville. "Our favorite site was in Seymour," Busse says. "But we couldn't work out our railroad difficulties there. CSX had plans to abandon its east-west line, and that would have jeopardized the location. So we started to look at alternate sites.

"It was in a Holiday Inn in Indianapolis one night, when representatives from the Indiana Department of Commerce, PSI Energy, Inc., and Nucor were looking at maps of other prospective sites in the north, and I asked the power company what they had in Crawfordsville," Busse recalls. "I asked if they had ample power there and the answer was yes. Then we started the site search up in this geography and found this particular site."

More than 1,000 construction workers and some 60 subcontractors, beginning in early 1988, helped transform the 860-acre site off County Road 400 East into a 1 million-square-foot steel manufacturing facility. A $17 million infrastructure package from the state helped to link the plant to Interstate 74 and to provide worker training. Nucor also got a 10-year tax abatement from Montgomery County officials and a nine-year economic development rate from PSI.

All that remained was making the new technology work in full-scale, commercial production. It almost didn't. "During the first five months of production, from August to December 1989, we were very disappointed. We had difficulties electrically, mechanically and from a quality perspective in pioneering the technology, " Busse admits. "But that comes with the territory,' he adds. "Today, we're very pleased. The last six months have been fantastic."

As do traditional, integrated casting processes, the new technology utilizes scrap steel from buildings, automobiles and various industries. And while Nucor uses a more modern electric arc furnace rather than an oxygen blast furnace, the steel is melted and refined using traditional methods, Busse says. The similarities end in the casting process, however.

A larger, more traditional machine will cast a block of steel that's approximately 1 foot thick," he explains. "It's stored and introduced later to a reheat furnace, taken back up to rolling temperature of about 2,000 degrees and then sent through a series of roughing mills which knock it down from 12 inches thick to 8 inches, to 5 inches, et cetera. And then it goes through a finishing train where the slab is further elongated and reduced.

"The difference is that when you're casting a thin-slab, you begin at 2 inches," Busse continues. "It goes directly through a normalizing furnace dropping the temperature to about 1,800 degrees-so it has to be elevated by only 200 degrees. That requires a minimum amount of energy compared to the integrated process." The thin-slab casting process also reduces the need for factory personnel, cuts down on overhead and eliminates certain support systems that a roughing mill has to have, he adds.

Smaller than traditional casting machines, Nucor's also is more easily maintained. "Our machine is very repairable," Busse says. "A breakout (overflow of steel in the casting process) in a big mill will take a day or two to fix, but ours will take only two hours. That's how simple this machine is in comparison to the bigger machines."

Because Nucor's product is thinner, it's also higher in overall quality, Busse claims. "Historically, flat-rolled steel products have always had a thicker center than they've had an edge. But our ability to deliver a more uniform, flatter profile is exceptional. You get more cuts out of our steel than other mills because too much of their weight is taken up by too thick of a center. That difference is worth about 10 a ton to the customer."

Classified as a mini-mill, Nucor's Crawfordsville plant serves a much smaller market than traditional steel making facilities, shipping to clients in a 3OO-mile radius. That difference highlights an important trend in the steel industry, Busse says.

"The way of the past was to think big and build big, because that was more economical," he explains. "But if you can build a mini-mill for one fourth the cost, you can afford to build two to three of them that are better placed geographically to serve given markets."

Nucor's emphasis on mini-mills extends to its management philosophy. Employing only 20 at its North Carolina headquarters, Nucor shuns the "county club" mentality of big steel, Busse says. Its 22 plants nationwide are all non-union, and the company's 5,000 workers are paid according to a unique bonus system that rewards production quality.

"The focus in the steel industry 15 or 20 years ago was centralization, but mini-mills went the opposite way," Busse says. "Everything is decentralized and very autonomous in nature. A lot of responsibility is vested in the management structure of any given operating unit. it's a bare-bones, no-frills operation."

Several other companies share Nucor's philosophy, Busse says, noting that some 35 percent of the nation's steel industries are now mini-mills. The advent of mini-mills has brought more jobs back to our shores from foreign competitors," he continues. "But it has also threatened the older mills in this country.

"We can't worry about the fact that the old mill employed 2,000 people and the new mill employs 500 people," Busse says. "The mini-mills have helped make the United States competitive in basic industry again."
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Title Annotation:Regional Report; Nucor Corp.
Author:Nelson, Eric
Publication:Indiana Business Magazine
Article Type:company profile
Date:Sep 1, 1990
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