NUCOR 2009 4 NUCOR STEEL Nucors History 1905. 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. Nucors 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.
NUCOR 2009 5 NUCOR STEEL Nucors 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: Nucors 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.
NUCOR 2009 6 NUCOR STEEL 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
NUCOR 2009 7 NUCOR STEEL 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 Americas most DIVERSIFIED steel producer Nucor Locations Intl Offices: -Novosteel (Trading Co.) -Monterrey, MX -Neuchatel, SWZ
NUCOR 2009 8 NUCOR STEEL 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 2 nd Largest Plate Producer 3 rd Largest Metal Buildings Producer 4 th Largest Sheet Producer
NUCOR 2009 9 NUCOR STEEL High Recycled Content 2008 Recycled Steel Content of Nucor Products (% by Total Weight) Product GroupAverage Recycled Content Nucor Bar Products97.7% Nucor Beam Products76.2% Nucor Plate Products92.5% Nucor Sheet Products70.2% Total Nucor Steel Combined89.7% Vulcraft Structural Products97.7% Vulcraft Decking70.2% Nucor Building Group89.7% NUCON Light Gauge Framing70.2% Nucor Fastener Products97.7% Nucor Wire Products97.7% Nucor Cold Finish97.7%
NUCOR 2009 10 NUCOR STEEL Steel Industry Outlook 2009-2013
NUCOR 2009 11 NUCOR STEEL US raw steel production vs. capacity Source: AISI, First River
NUCOR 2009 12 NUCOR STEEL US GDP vs. Steel Demand 1988 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 Insights US Real GDP Percent Change Estimates 2009 – (2.5%) 2010 – 2.0% 2011 – 2.9%
NUCOR 2009 13 NUCOR STEEL 13 NA auto production forecast Source: CSM Worldwide (May 2009) 35%+ drop this year Average 11.5 2009 to 2013 Logic Check: NA scraps 14 million per year Imports average 2.5 million NA must build 11.5 just to stay even NOTE:***Wards North America Vehicle Production was: 8.2M Vehicles in 2009 and 9.99M Vehicles in 2010
NUCOR 2009 14 NUCOR STEEL Non-residential construction forecast No return to 1990 levels thru 2013 Source: First River, FW Dodge and PCA (Spring 2009) 30%+ drop 2008 to 2010 Average 1,115 2009 to 2013 Top forecast line is FW Dodge Bottom line is Portland Cement Association
NUCOR 2009 15 NUCOR STEEL 15 US finished steel demand forecast Weak throughout forecast period Actual ADC Forecast Source: CSM, FW Dodge, PCA, WSA, First River 35-40% drop this year Average 90-95 MT 2009-2013 110
NUCOR 2009 18 NUCOR STEEL 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.
NUCOR 2009 19 NUCOR STEEL Consumer Credit 1997-2009 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 credit approaching ZERO Outstanding Consumer Credit Annual % Increase in Consumer Credit Lehman Brothers
NUCOR 2009 20 NUCOR STEEL 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.
NUCOR 2009 21 NUCOR STEEL 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.
NUCOR 2009 22 NUCOR STEEL 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