The Little Steel Company that Could: Ken Iverson and Nucor Corporation
By Kay Peninger

Which city was home to a revolution in U.S. steelmaking? Most people would likely answer Pittsburgh, but they would be wrong. The revolution occurred from the unlikeliest of places – the Cotswold Building on Randolph Road in Charlotte. This is where F. Kenneth “Ken” Iverson (1925-2002) located the company that would eventually become Nucor Corporation and changed the face of the U.S. steel industry.

Nucor was formed from the Nuclear Corporation of America, which grew out of Reo Motor Company. Ken Iverson joined Nuclear Corporation in 1962 when it bought Vulcraft, a manufacturer of steel joists, where he worked. Iverson quickly rose to president in 1965.

In the late 1960s, the company’s steel joist and deck business was dependent on imports from a single supplier, who kept raising prices. In order to save money, Iverson decided the company should build its own steel mill to supply the steel it needed. At that time, the vast majority of steel produced in the U.S. was made using blast furnaces. Iverson, however, decided to build a “mini-mill” that used an electric arc furnace (EAF), which uses electricity to melt post-consumer scrap metal into new steel. That technology was being used more widely in Europe than in the U.S. In 1969, Nucor’s first EAF mill began operating in Darlington, South Carolina, and the revolution was born.

People were skeptical that EAFs could produce larger quantities of steel or that they could ever produce anything but basic steel products. Nucor and Iverson would prove the skeptics wrong. Nucor kept building EAF mills and increasing their capacity. Nucor’s mills also moved beyond producing basic steel products and started producing higher value sheet, plate and structural steel.

Iverson was also recognized for his innovative management philosophy. His 1998 book, Plain Talk: Lessons from a Business Maverick, detailed his unique management philosophy, which has since been used as a model in Harvard Business School case studies and was featured in Jim Collins’ popular management book Good to Great: Why Some Companies Make the Leap . . . And Others Don’t. Iverson believed in driving decision making down to front line workers who he thought were best positioned to make production decisions. As a result, only five layers of management existed between front line workers and the CEO. He also utilized a pay-for-performance system that awarded Nucor employees, who are referred to as “teammates,” weekly bonuses based on production. Nucor teammates were non-union and Iverson’s pay-for-performance system was a radical departure for an industry dominated by unions. However, this system resulted in Nucor teammates being among the highest paid in the industry, and the flexibility allowed the company to avoid layoffs during economic downturns, unheard of in the steel industry.

Today, Charlotte-based Nucor Corporation is the largest steel producer in the U.S., operating 24 scrap-based EAFs that have the capability to produce almost 29,000,000 tons of steel annually. Nucor is also North America’s largest recycler. In 2014, Nucor used over 19 million tons of scrap steel as the primary raw material in producing its steel and steel products.

Like all great leaders, Iverson had a vision and dared to go in a direction few thought possible. From its modest beginnings in the Cotswold Building to the largest steel producer in North America – Nucor changed the face of the steel industry and made Kenneth Iverson a legendary business leader.


Sources:

Electric Arc Furnace. Courtesy of Xi’an Abundance Electric Technology Co., Ltd.

Collins, Jim. Good to Great: Why Some Companies Make the Leap…And Others Don’t (New York, 2001)

Iverson, Ken. Plain Talk: Lessons from a Business Maverick (Hoboken, 1998).

Nucor, 2015. http://www.nucor.com

Wayne, Leslie. “F. Kenneth Iverson, 76, Dies; Reshaped the Steel Industry,” 2002. The New York Times.

http://www.nytimes.com/2002/04/17/business/f-kenneth-iverson-76-dies-reshaped-the-steel-industry

Williams, Wiley J. “Nucor Corporation,” 2006. NCpedia. http://ncpedia.org/nucor-corporation

The Little Steel Company that Could: Ken Iverson and Nucor Corporation