Must-know: Nucor’s transformation into a steel company



Nucor Corporation: The largest U.S. steel maker

Today, Nucor (NUE) Corporation is the largest steel company in the United States with over 27 million tons of production capacity. When it originally started, the company wasn’t in the steel making business. It’s a story of transformations spread across a century. The company evolved by overcoming multiple challenges. We’ll start our analysis by looking into some of Nucor’s historical facts.

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A brief overview of Nucor’s history

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The journey began in 1905, when Ranson E. Olds, left his own company Olds Motor Works and founded REO Motor Company which evolved into Nucor. REO was a successful business enterprise that initially relied on defense contracts to stay in business. After the Korean War ended in 1955, its assets were merged with Nuclear Consultants Inc. to form Nuclear Corporation of America.

How Nucor entered into the steel business

In 1962, it acquired Vulcraft which was a producer of steel joists and girders. In 1969 it finally got into steel making by opening its first mini mill in South Carolina. Initially, it was meant to provide Vulcraft with a reliable supply of steel. The company realized the potential of the steel industry and shed its conglomerate business model to become a focused steel producer. The company also changed its name to Nucor. Since then, it has strengthened its position in the steel industry through both organic growth and acquisitions.

Nucor’s decade of growth

Between 2001 and 2010, Nucor adopted a multi-pronged growth strategy. It saw tremendous growth during this period and made over 15 acquisitions. The company more than doubled in size over this period. Stock markets also rewarded Nucor for its unprecedented growth. The total shareholder return from September, 2000, to the end of 2012 was 538%, which far exceeded the 134% return for Standard & Poor’s Steel Group Index. You can also see the total return of Nucor since 2000 in the previous chart.

We’re presenting an overview of Nucor Corporation in this series. Other steel companies and exchange-traded funds (or ETFs) in the U.S. are ArcelorMittal (MT), U.S. Steel Corporation (X), Reliance Steel & Aluminum (RS), and the SPDR S&P Metals and Mining ETF (XME).


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