nucor 2009 1 nucor steel. nucor 2009 2 nucor steel speech outline nucor overview steel industry...
TRANSCRIPT
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Speech Outline
• Nucor Overview
• Steel Industry Outlook 2009-2013
• U.S. Economy Outlook
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Nucor Overview
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NUCOR’S HISTORY1905. Ransom E. Olds, creator of the Oldsmobile, had a dispute with
stockholders and left his own company – Olds Motor Works. He soon formed Reo Motor Company, which evolved into the Nuclear Corporation of America and ultimately Nucor.
1962. Nuclear Corporation acquires Vulcraft, an unassuming producer of steel joists and girders. To run the newly acquired
Vulcraft, Nuclear Corporation hires Ken Iverson as CEO.
1969. Nucor’s first mini mill to produce merchant steel products, located in Darlington, SC, goes into production
1989. Nucor ushers in a new era of steelmaking as thin-slab technology goes on-line at the new mini mill in Crawfordsville, Indiana. It is the first mini mill in the world to make quality flat rolled steel using the technology. Nucor also established a joint venture beam facility with Yamato Kogyo of Japan, utilizing near net shape casting.
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NUCOR’S HISTORY (CONTINUED)2000. Dan DiMicco is named the new president and CEO of Nucor.
DiMicco has led the company through an unparalleled period of growth. The company moved from green field growth to acquisition based growth.
2002. Another world first: Nucor’s Castrip micro mill goes on-line in Crawfordsville, Indiana. This revolutionary technology instantly transforms molten steel directly into steel sheets in just one remarkable step. Compared to an integrated steelmaking facility, the Castrip process consumes about 95% less energy and emits less than one-tenth the greenhouse gases.
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Nucor Today
• 59 Operating Facilities in 18 states, Italy and Trinidad
• Nucor operates scrap-based steel mills in 19 facilities – producing bars, beams, sheet, and plate.
• In 2008, 21,682 employees generated $23.7 billion in sales and 20.9 million tons of steel shipments
• Corporate Staff of 85 Employees
• Harris Steel Group acquired in March 2007. Operated as a separate, wholly-owned subsidiary – 46 rebar fabrication facilities between Canada & United States; 2 cold finished bar, wire & mesh facilities; 11 metal grating facilities; steel trading and distribution
• DJJ acquired in February 2008. Operates as a separate, wholly-owned subsidiary – 61 scrap processing facilities; Brokerage and service group, N.A. scrap processing yards; self-service used auto parts stores
• Largest recycler in the North America
• Largest producer of steel in North America
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Nucor Facilities
• Bar Mill Group (12)
• Structural Mills (2)
• Sheet Mill Group (4)
• Plate Mills (2)
• Vulcraft / Verco joist & deck (16)
• Cold Finish Group (5)O Building Systems Group (10)
• Fastener Division (1)
• Nucon (2)
Harris Steel Group Facilities Reinforcing Steel Fabrication Plants
- 23 Canadian Facilities
- 12 U.S. Facilities• Cold Finished Bar, Wire, Mesh (“IPG”)
- 2 Canadian Facilities
• Steel & Aluminum Grating, Expanded Metal (“IPG”)
- 5 Canadian Facilities
- 6 U.S. Facilities
Kapolei
Hawaii
Trinidad
Nu-Iron DRI Facility
North America’s most DIVERSIFIED steel producer
Nucor Locations
Int’l Offices:- Novosteel (Trading
Co.)- Monterrey, MX- Neuchatel, SWZ
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MARKET LEADERSHIP IN NORTH AMERICA
Position
Largest Structural Producer
Largest Bar Producer
Largest Rebar Producer
Largest Cold Finished Bar Producer
Largest Steel Joist Producer
Largest Steel Deck Producer
Largest Rebar Fabrication, Distribution, & Placement Company
2nd Largest Plate Producer
3rd Largest Metal Buildings Producer
4th Largest Sheet Producer
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High Recycled Content
2008 Recycled Steel Content of Nucor Products(% by Total Weight)
Product Group Average Recycled Content
Nucor Bar Products 97.7%
Nucor Beam Products 76.2%
Nucor Plate Products 92.5%
Nucor Sheet Products 70.2%
Total Nucor Steel Combined 89.7%
Vulcraft Structural Products 97.7%
Vulcraft Decking 70.2%
Nucor Building Group 89.7%
NUCON Light Gauge Framing 70.2%
Nucor Fastener Products 97.7%
Nucor Wire Products 97.7%
Nucor Cold Finish 97.7%
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Steel Industry Outlook 2009-2013
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US raw steel production vs. capacity
0
20
40
60
80
100
120
140
19891990
19911992
19931994
19951996
19971998
19992000
20012002
20032004
20052006
20072008
2009 (est)
2010 - 2013
Mill
ion
To
ns
Production Capacity
Source: AISI, First River
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-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
Average Annual GDP Growth
Ste
el D
em
an
dA
ve
rag
e A
nn
ua
l Ch
an
ge
US GDP vs. Steel Demand1988 to 2008
Source: US BEA, AISI, First River
Steel demand falls when GDP grows <2.5%
Steel demand falls when GDP grows <2.5%
Steel demand rises when GDP grows >2.5%
Steel demand rises when GDP grows >2.5%
Global Insight’s US Real GDP Percent Change Estimates
2009 – (2.5%)2010 – 2.0%2011 – 2.9%
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NA auto production forecast
14.6
13.5
11.9
9.7
12.6
8.0
4
8
12
16
20
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010F 2012F
Mill
ion
Veh
icle
s
Source: CSM Worldwide (May 2009)
35%+ drop this yearAverage 11.5 2009 to 2013
Logic Check:NA scraps 14 million per year Imports average 2.5 millionNA must build 11.5 just to stay even
NOTE:***Ward’s North America Vehicle Production was: 8.2M Vehicles in 2009 and 9.99M Vehicles in 2010
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Non-residential construction forecastNo return to 1990 levels thru 2013
1,467
1,505
1,246
1,0941,131
1,397
1,032
1,100
921826831
0
500
1,000
1,500
2,000
2,500
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010F 2012F
Mill
ion
Sq
uar
e F
eet
Source: First River, FW Dodge and PCA (Spring 2009)
30%+ drop 2008 to 2010Average 1,115 2009 to 2013
Top forecast line is FW DodgeBottom line is Portland Cement Association
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US finished steel demand forecastWeak throughout forecast period
110
105
95
85
70
0
25
50
75
100
125
150
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010F 2012F
Mill
ion
To
ns
Actual ADC
Forecast
Source: CSM, FW Dodge, PCA, WSA, First River
35-40% drop this yearAverage 90-95 MT 2009-2013
110
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Economic Recovery
•Confidence
•Credit
•Government Action
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Recession Unemployment
-8000
-6000
-4000
-2000
0
2000
4000
6000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39
Months After Peak Job Month
Ch
ang
e in
U.S
. jo
bs
(in
Th
ou
san
ds)
Current Recession 2001 Recession 1990 Recession 1981 Recession 1974 Recession
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Consumer Economy in Transition
• Consumers transitioning from debt-driven economy to savings-driven economy.Consumers using less debt
• End-use demand determined by what consumers can afford, NOT by what they can borrow.
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Consumer Credit1997-2009
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
Jan-97
Jun-97
Nov-97
Apr-98
Sep-98
Feb-99
Jul-99
Dec-99
May-00
Oct-00
Mar-01
Aug-01
Jan-02
Jun-02
Nov-02
Apr-03
Sep-03
Feb-04
Jul-04
Dec-04
May-05
Oct-05
Mar-06
Aug-06
Jan-07
Jun-07
Nov-07
Apr-08
Sep-08
Feb-09
Ou
tsta
nd
ing
Cre
dit
(M
illi
on
s o
f D
oll
ars)
0%
2%
4%
6%
8%
10%
12%
14%
During 2001 recession,credit still grew at rates
of 5-10% per year
Source: U.S. Federal Reserve, Consumer Credit Outstanding, Millions of Dollars, Seasonally Adjusted
2009 - New creditapproaching ZERO
OutstandingConsumer Credit
Annual % Increasein Consumer Credit
Lehman Brothers
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Government Driving Economy
• US trade deficit at all time high
• US debt at all time high
• US budget deficit at all time high
• Government is picking up the debt that
consumers are shedding.
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Government Action Needed in 2009
• Consider American Manufacturing when enacting new public policy, such as:– Employee Free Choice Act– Cap-and-Trade and Climate Change– National Health Care– Energy Policy
• Government can drive costs and unemployment up by over regulation or make American manufacturing more competitive and create jobs.
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Government Action Needed in 2009
• Enforcement of the Rules of International Trade
– End currency manipulation– Challenge illegal export
subsidies– Fight foreign governments
competing in commercial markets
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