With a combination of Nucor Corp. incentives and Arkansas ingenuity, Mississippi County has become the second-largest producer of steel in the country.
The 1,100 employees at Nucor’s two mini-mills near Blytheville produce about 4.3 million tons and $1.7 billion of steel annually – more than the traditional steel towns of Pittsburgh or Birmingham, Ala. Only the Gary, Ind., area outpaces northeast Arkansas. The two facilities account for about half the steel manufactured by Nucor’s 25 plants from South Carolina to Utah.
Workers’ wages average about $65,000 a year, with about two-thirds of that from bonuses paid for exceeding production goals. The company has a waiting list of 1,000 people who want a job there.
So when Nucor-Yamato Steel Co. employees realized that replacing the brick lining in a furnace took about 30 hours, they recently improved on a method of having a prelined furnace ready when one wears out.
The entire 200-ton furnace is lifted out with a crane and replaced with a new one, cutting down-time to eight hours. Workers expect to get the turnaround eventually trimmed below four hours.
“We hire good people, put them in a culture that encourages them to do well, give them the tools and opportunity to excel and then we get the heck out of their way,” Nucor-Yamato President Dan DiMicco says as he walks through the 2 million SF plant, calling workers by name over the roar of the furnace.
“We believe it’s a winning system, but it’s not something that has magical foo-foo dust or sleight of hand. It’s just executing extremely well.”
‘Can’t Beat This’
About 90 percent of the workers are from a 60-mile radius. Many were farmers or machinery workers who have been ingrained with a strong work ethic since childhood.
“You can’t beat this company,” Doug Foyt says as he looks down on the production process from his glassed-in, computer-lined room 30 feet above the plant floor. Seven years ago, Foyt started at an entry level job at Nucor-Yamato. Now he’s a supervisor.
“They give you all the opportunity in the world,” he says. “The people have a more positive outlook and the bonus program is such a motivator. The more the company makes, the more we make.”
Lamon Aldridge has worked for five years at Nucor Steel, about eight miles away in Hickman. He’s gotten two promotions and is now a first helper.
“Everybody around town and up in Missouri would like to get a job at Nucor,” he says.
Every production employee’s compensation is measured by profitability and the amount of quality tons of steel produced. Bonuses, paid every Thursday, are simple to calculate, says DiMicco, who was the fifth highest-paid Nucor executive last year with more than $950,000. Almost $800,000 of that was incentives based on the company’s profitability.
“When they bring their paycheck home every Thursday, the wives get a real quick assessment of what’s going on, and they’ll question them when the bonus is not as much as it was the previous week,” DiMicco, a native New Yorker who got his education at the University of Pennsylvania, says with a laugh. “So there is constant reinforcement both here and at home to do a better job.”
Half of U.S. Market
Nucor-Yamato has 760 employees who primarily make wide-flange beams for the construction industry – about 2.2 million tons worth about $1 billion this year. That is more than 50 percent of the U.S. market.
The facility is almost two times as efficient as its stiffest competition. On average, one ton of steel is produced per employee every 50 minutes, 2,800 tons per employee every year. Competitors’ plants are doing well to produce a ton per employee every 90 minutes.
With such efficiency, it’s understandable that Nucor has discussed the possibility of expanding Nucor-Yamato by adding a third mill. DiMicco says, however, there are no immediate plans to do that.
The Hickman mill is one of only three plants in the world, all owned by Nucor, producing continuous thin-slab, coiled steel. Its 350 employees will produce about 2.1 million tons of steel worth about $700 million this year.
“These guys here have done a fantastic job,” says Mike Parrish, a Nucor vice president who manages the Hickman plant. “We’ve broken all kinds of records. We’re very happy with the progress we’ve made here.”
The Hickman plant, which makes steel for pipes, tubes, processors and some uses in the automotive industry, sells 30-40 percent of its product to companies such as Huntco Steel Inc. and Maverick Tube that have built plants within good jogging distance of Nucor.
“What’s great about this area is it’s centrally located in the country,” Parrish says. “It’s great to advertise this area. You’re on the [Mississippi] river. You can not only ship anywhere in the country, you can ship anywhere in the world.”
No. 1 in Satisfaction
The continuous thin-slab process Nucor uses at Hickman was first implemented at the company’s Crawfordsville, Ind., facility. The continuous process provides several advantages over other plants.
Most other steel plants stockpile slabs of steel before it is coiled, says David Chase, Hickman’s rolling mill manager. A Bethlehem Steel plant where Chase worked before he joined Nucor had a stockyard of 1 million tons of steel and employed 120 people.
At Hickman and Crawfordsville, the steel is coiled directly from the caster, eliminating the need for stockpiling slabs of steel. And the plant can take an order for steel and have it ready for shipment within four hours, sales manager Jerry Starnes says.
“The lead time on an order could be two or three hours here compared with two or three weeks someplace else,” Starnes says.
That responsiveness has helped make the Hickman facility the best mill in the country in customer satisfaction. A survey of 5,500 customers by Jacobsen & Associates of Rochester, N.Y., also placed Nucor-Yamato among the top 10 in customer satisfaction.
From Chairman Ken Iverson and Chief Executive Officer John Correnti on down, Nucor avoids bureaucracy like the plague. Middle management is almost non-existent at the company. DiMicco and Parrish run their plants with almost complete autonomy.
Nucor, as most other steel companies, has been in a down cycle for more than a year. Its stock is trading around $53 a share. It shot up last month from about $47 a share when Nucor announced it would raise steel prices $10 a ton, the first steel company to increase prices.
“They are extremely efficient,” says Brian Eisenbarth of Collins & Co., an investment firm near San Francisco. “But they’ve slowed down from the tremendous growth they’ve seen over the last several years. They went from 40-50 percent quarterly earnings growth down to more than 20 percent decreases in earnings in the last two quarters. But those comparisons [with 1995] get pretty tough.”
DiMicco says the work force in northeast Arkansas has proven to be among the best in the world.
“People say that you have to be from other places to be able to make good steel, maybe Germany or Japan or someplace else in the United States,” DiMicco says. “But just give these guys here the opportunity and the tools and training and they can do it as good or better than anybody in the world. They’ve done it.”
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