And the 2005 Plant of the Year winner is...

Print page

Email page

By Sheila Kennedy

PlantServices.com

Keywords: "Plant of the Year", Nucor and "Plant Services"

Our Plant of the Year prevails with world-beating maintenance, reliability and asset management.

When the U.S. steel industry spiraled downward in the early 2000s, one mini-mill continued to shine bright. Not only did it survive the bankruptcies, liquidations, plant closures and consolidations faced by many of its peers, it grew in capacity, productivity and profitability without compromising quality. How did they do it? What set them apart? And, most importantly, what lessons can be taken away by manufacturers in other sectors?

Nucor Corp.’s steel bar mill in Darlington, S.C., is the embodiment of what’s right in manufacturing. The mill’s ability to persevere was by no means an accident. A combination of risk, resolve, teamwork and innovation helped to keep the company safely in the black.

Central to its success is a culture of innovative asset management – not just capital assets, but human resources as well. Nucor-Darlington’s asset strategy includes insightful planning, shrewd investments, cutting-edge technology, best practices and a lasting devotion to its workforce.

Team Players

"People are your number one asset," said Andy Munson, maintenance manager, Nucor-Darlington (back row, second from left).

“To hell with it”
Nucor first ventured into steel manufacturing when the company encountered supply problems for two acquired steel joist plants. According to Nucor CEO Daniel DiMicco, then-CEO Ken Iverson decided, “To hell with it, I’m gonna build my own steel mill.” With the goal to produce steel as cheaply as it could buy imported steel, Nucor’s first steelmaking facility was built in 1969 in Darlington.

Nucor has since grown to be the largest steel producer in the U.S. and the second largest steel manufacturer in the Western hemisphere, as well as America’s largest recycler. Nucor has a total capacity of more than 20 million tons of steel annually, with net sales of $11.3 billion in 2004. The company’s scrap-based bar, sheet, structural and plate mills span 17 facilities throughout the U.S.

Nucor’s mills use modern steelmaking techniques to produce steel efficiently and at globally competitive costs. Recycled steel scrap and other metallics are melted in large electric arc furnaces, poured into continuous casting systems, and converted in rolling mills into finished products.

The bar mills produce bars, angles and light structural shapes in carbon and alloy steels, which are used in automotive, construction, farm equipment and other applications. The total capacity of Nucor’s nine bar mills is approximately 6.3 million tons per year, making the Bar Mill Group a cornerstone of the company.

Darlington is currently Nucor’s third-largest bar mill in terms of buying production, and the largest bar producer in the Southeast. The plant produces more than 200 grades of steel. “The Darlington mill was originally designed in 1969 for a capacity of 60,000 tons,” says Andy Munson, Nucor-Darlington’s maintenance manager. “This year, Darlington’s melt shop has a 900,000 ton capacity.”

Munson and his team of 74 maintenance personnel are responsible for the melt shop, two bar mills and facilities maintenance at the Nucor-Darlington facility. Rolling Mill No. 1 produces smaller structural products, while Rolling Mill No. 2 produces larger structural shapes, odd leg angles, channels and heavier sections.

Tough competition
The U.S. manufacturing market is threatened by huge challenges with global competition, high costs and regulatory policies that shrink profits. Three million jobs were lost in the sector since 2001 – the same year the steel industry entered a severe downturn and suffered one of the toughest periods in its history. Between 2001 and 2003, most steel manufacturers lost money. More than 30 U.S. steel companies have gone bankrupt in the past few years.

Higher prices on energy and raw materials led to pricing pressures that were furthered by a weakened dollar and decreased domestic output. Global overcapacity, currency manipulation and illegal dumping contributed heavily to the decline. China now consumes approximately one-third of the world output of rolled steel, and its trade practices are noted as a particular risk to the industry.

In addition to international trade concerns, domestic issues contribute to challenge of remaining profitable. Legacy and healthcare costs, tort reform, tax policy, environmental issues and regulations are among the many aspects that burden the “Made in USA” label and caused steel prices to soar.

According to DiMicco, such issues “constitute something north of a 20% disadvantage to locate in the United States versus a basket of our largest trading partners.”

Against all odds
Despite seemingly overwhelming challenges, Nucor’s performance during the industry’s depression was remarkable. The company remained profitable every year, regularly increased its dividend and maintained its track record of no layoffs. “Nucor has enjoyed success while overcoming obstacles our foreign counterparts never face,” DiMicco says.

Throughout the lean years, Nucor managers invested strategically and improved operations so they’d be ready when the steel industry recovered. This is consistent with Nucor’s philosophy: Invest during the difficult times and continue to raise the bar during good times.