New Territory for Nucor

Given its aggressive and often innovative approach to steel making, it’s not surprising to see Nucor Corp., Charlotte, N.C., tackling new ventures. Most recently, the company has announced plans to build a new one million tons-per-year steel plate mill in Hertford County, N.C. Nucor already produces a wider variety of steel products than any other steel producer in the United States, including both integrated mills and mini-mills, and the addition of the planned $300 million plate mill will expand its scope even further.

Nucor officials judged that there is ample room in the plate industry for improvements in efficiency, according to Joe Rutkowski, vice president and general manager of Nucor’s Darlington, S.C., bar mill. Rutkowski will soon hold the same position with the Hertford County plate mill.

"We took a cursory look at it and found that there were a lot of producers that were using older equipment, and that there were a lot of technological advantages out there for someone new in the business," Rutkowski explains. "We felt that we could produce a product at a much lower cost than the people who were currently in the marketplace, and the marketplace demands a pretty good price. Also there is quite a bit of import in the plate market."

Many customers are likely to prefer domestic plate to import because it will be easier to achieve just-in-time delivery, he says.

Dr. Richard Burlingame, a Cleveland steel industry consultant, is not surprised that Nucor is moving into the plate business, since Nucor was the company that pioneered thin-slab casting almost a decade ago, enabling mini-mills to produce flat-rolled steel products economically.

"That was a revolution in steel making comparable to other true revolutions, such as the development of the Bessemer steel making process, for example, or even conventional continuous casting improvements over the old ingot casting," says Burlingame. "It is a very logical step for them to re-tool the thin-slab caster concept to make a variety of plate grades."

Other mills are likely to follow Nucor’s lead, he adds. "This is a highly competitive business and I don’t see any patent-type limitations that would prevent competitors from swinging in right along with that same thing. They’ll have to do something."

Construction of the Hertford County plate mill will begin after the company acquires the necessary permits. Nucor officials estimate this should occur in early 1999. If all goes as planned, the mill could be operational by the end of next year. "We started working on it last March a year ago, and now we’ve announced the mill and we’re starting to buy equipment," says Rutkowski. "If you talk to people in the industry, that’s real fast-tracking."

Nucor officials expect the Hertford County mill to produce steel efficiently and at a lower cost through the combination of wide casting technology and a vertical edger. "Most continuous casters only cast to a certain width," Rutkowski explains. "So in order to make something wider, you cast the slab and cut it to length, and then actually turn it sideways and roll it out to a certain width, and then turn it 90 degrees and roll it out to a length. That causes some distortion in the plate and some yield losses when you make the finished plate, and it doesn’t help your tolerances."

With wide casting technology, on the other hand, the Hertford County mill will directly cast the steel 120 inches wide, and the plate will go straight through without being rolled crosswise. "This gives you a much better yield," says Kenneth Iverson, chairman of Nucor.

In addition, the use of a vertical edger will ensure the accuracy of the plate widths. "We will cast the slab to the width that’s required in the finished product, with a little bit of an edging pass - an inch or two - just to trim it up and make it look good," says Rutkowski. "Therefore, our finished product will have a very high yield and will not require a lot of the finishing. A lot of times people have to cut a finished plate basically out of a distorted raw plate, and we shouldn’t have to do that."

The new mill will be equipped with an electric arc furnace, a ladle metallurgical facility, a wide continuous caster, a reheat furnace, and a four high reversing mill with a vertical edger, according to Rutkowski. After the steel goes through the reversing mill, it will be leveled and sheared to length into what is called "mother plate" - a long plate which is passed over a cooling bed.

"After it’s cool, we will have the ability to do some side trimming, if necessary," he adds. "Then we will cut it to length and put it in our warehouse and ship it."

The new plate mill will eventually produce a broad variety of plate products. "We’re going to be making plate initially from 3/8 inch to 2 inches thick and from 6 feet to 10 feet wide and in various lengths," Rutkowski explains. "Eventually we will be going down to a thinner product, but it will be a few years yet."

Steel plate from the mill will be sold either to service centers, which take the plate and cut it into smaller pieces for fabrication, or directly to manufacturers of products such as heavy equipment, barges, ships, large tanks, railroad cars, bridges, and structural girders. Most of these customers will be domestic.

"We probably won’t do a lot of overseas business," says Rutkowski. "We will displace some imports and displace some domestic. My guess is that our customers will be located anywhere east of the Mississippi."

The new plate mill will complement the rest of Nucor’s steel producing facilities, according to Rutkowski. "We already have a lot of basis in casting and rolling and finishing and melting and so we’re able to rely on that experience," he says. At a million tons of steel plate produced annually, the Hertford County mill will only represent about 8% to 10% of Nucor’s overall steel production.

The Hertford County mill will be located right on the Chowan River, which empties into the Albemarle Sound for convenient - and affordable – river shipping, as freight costs are much lower by ocean-going barge than by truck or even rail, according to Rutkowski. The mill will source scrap from all over the East Coast.

"We are going to have a port with river barge access," he explains. "We expect to bring in a predominance of our scrap to Norfolk, Va., and transload in some manner either to barge or to rail and bring it to our site. We’re only going to be about 60 or 70 miles from Norfolk. And we would bring the river barges into our port on the Chowan River and we’ll be able to unload them there. So we could pull scrap anywhere from the Northeast to Miami."

The David J. Joseph Co., Cincinnati, which has for years been Nucor’s main scrap broker, will source scrap for the new Hertford County plate mill. Since the mill is designed to produce about 1 million tons annually of steel plate, it will require approximately 1.1 million tons of scrap each year, according to Rutkowski. "But it will probably take us a couple of years to reach those levels," he cautions.

The mill will not require low-residual scrap, so its raw material costs will not be out of hand, according to Iverson. "This process doesn’t require scrap that has a very high quality like a flat rolled mill does," he says. "It can use regular dealer grades of scrap. That is a distinct advantage."

This also means that the mill will have no need for iron carbide from Nucor’s plant in Trinidad or for any other form of direct-reduced iron (DRI). "DRI is a low-residual additive that I don’t think we will need, and also I don’t think we will want to pay for," says Rutkowski

He doesn’t foresee any problems obtaining sufficient scrap to supply the new mill. "There are a lot of good scrap suppliers on the East Coast," he says. "We know a lot of those people already from what we do at Berkeley and Darlington."

Building in N.C.

Although Nucor has had a fabrication plant - not to mention its headquarters - in the state of North Carolina for many years, this is the first steel mill the company has sited in its home state. Rutkowski says he believed at one time that the company was unlikely to ever site a mill in Hertford County.

"It wasn’t that we didn’t want to, but it made no real sense," he explains. "But the state of North Carolina, the North Carolina-Northeast Partnership, and Hertford County really came together. They talked to us openly and asked us what we needed and what were our main concerns. Then they really listened to us."

The state of North Carolina offered the company an attractive group of incentives, including offsetting part of the cost of Nucor using the Albemarle Sound and using river barges rather than ocean barges, says Iverson. "There are also some tax incentives involved, similar to the tax incentives that we obtained when we built the mill in Berkeley County, S.C.," he adds.

Hertford County is a fairly low-income, rural area, with a total property value of $600 million, so the addition of a $300 million Nucor mill that will provide more than 300 jobs will have a tremendous impact on the local economy.

"It’s a wonderful place to put a mill, because you couldn’t find a more deserving county in North Carolina or probably many other places in the United States," says Iverson. ""Generally you get a good reception in building a mill in a rural area where there’s not a lot of employment and of course we pay really quite good wages."

The scenario is very similar to that in several other rural counties around the country in which Nucor has built steel mills. "This is typical Nucor," says Rutkowski.

In terms of raw steel produced annually, Nucor ranks second in the United States next to U.S. Steel, Pittsburgh, an integrated facility. However, Rutkowski points out being the largest is not the company’s goal. "I’ve heard Ken Iverson tell all of us as general managers many times that is not a goal of ours. It is something that will happen, but it is not our goal. Our goal is to be the most profitable steel maker in the United States."

The new Hertford County mill is part of the company’s strategy of building new mills and diversifying the steel products they supply. "We already make a wider variety of steel products than any other steel company in the United States, both integrated and mini-mills," says Iverson. He adds that it is a distinct advantage to be able to offer customers any product they might want, as well as to avoid being tied to any one segment of the economy or any one market.

"I run Darlington, Nucor’s oldest mill," Rutkowski adds. "When Darlington entered the market, the integrated producers were into everything - rebar, angles, structurals, plate, sheet - and now the integrateds are only really in the sheet and plate and a very little bit in the bar market. The bar market - the structural market - is absolutely dominated by the mini-mills. So most mini-mills are still in that one product line where we will now actually span all the product lines."

Upon completion of the new Hertford County mill, Nucor will have nine steel mills with a total steel making capacity close to 12 million tons per year (see sidebar). This includes the planned plate mill, four bar mills, three thin slab mills, and a joint venture with a Japanese firm to produce wide flange beams. In addition, Nucor is currently building a new mill in Berkeley County, S.C., which will also produce wide flange beams. This facility is slated to begin operating later this year, and will use the melting facilities of the company’s existing mill in Berkeley County.

The U.S. steel plate market is undergoing significant changes this year. In May, a month before Nucor announced its new plate mill, Bethlehem Steel Corp., Bethlehem, Pa., completed its acquisition of Lukens Inc., Coatesville, Pa., forming Bethlehem Lukens Plate, a division of Bethlehem Steel Corp.

Bethlehem Lukens Plate’s six existing plate mills together produce about 2.3 million tons annually. The company plans to close two of these facilities, but with increased utilization of the other four mills, production is expected to remain steady at about 2.3 million tons of carbon, alloy, resulphurized, high strength-low alloy, normalized, quenched and tempered, clad and stainless plate.

The merger is "one of the hottest pieces of news in the whole industry," according to Burlingame, and although Nucor has been successful at producing lower-cost steel, they will face strong competition from Bethlehem Lukens Plate. "Lukens always was a top-of-the-line plate producer, going all the way back to probably 100 years ago, and now with

Bethlehem (which has always been a plate producer too) as their parent firm, this is a formidable combination of technology, know-how and money," he says.

Lukens is a medium-sized steel company, and Bethlehem is one of the largest integrated mills. "I doubt whether Nucor right out of the box is going to be able to shake those people up very quickly," Burlingame adds.