www.downloadslide.com 444 Additional Cases its welfare capitalism had the desired effect. The company enjoyed one of the lowest rates of employee turnover in the industry. When unionization gripped the industry in the 1930s, REO’s transition was generally smoother than elsewhere. In addition, the older employees felt tremendous pride in REO’s products and the firm’s contribution to the community. REO was a profitable company throughout the 1920s. Unfortunately, REO’s management invested these profits in an expanded line of cars, particularly in the higher price range. These investments were made just prior to the Great Depression, when car sales in general—and luxury vehicles in particular—plummeted. In 1933, REO’s president was removed and Ransom Olds was brought back as company chairman for one year. He launched several projects, including a light version of the Mack truck, a concept delivery van, and a new line of buses. None of these initiatives were profitable. In 1936, REO suspended car production and, in 1938, filed for bankruptcy protection. The company reorganized as a truck and bus manufacturer. REO survived over the next 15 years mainly through military contracts for its trucks and buses. It also expanded into the manufacture of lawn mowers and children’s swing sets. REO GOES NUCLEAR When the Korean War ended in 1953, REO’s military contracts diminished, leaving the company in a difficult financial situation. REO’s board sold off its vehicle manufacturing operations and, with only $16 million in cash and no operating business, decided to liquidate the company. A dissident group of shareholders had different plans, however. The shareholder group forced REO’s board to acquire Nuclear Consultants, Inc., a tiny nuclear services company. In 1955, REO Motor Company changed its name to Nuclear Corporation of America Inc., becoming the first publicly traded nuclear company. Nuclear’s stock soared based on the popularity of the word nuclear as well as various “publicity stunts” to leverage the company’s name. The company’s actual business activities in nuclear instrumentation (geiger counters), nuclear energy, chemicals, and electronics were much less spectacular, however. (One source reports that they “bordered on the illusory.”) Able to sell stock relatively easily, Nuclear went on a buying spree to become a conglomerate of several independent businesses. By the early 1960s, Nuclear was involved in nuclear services, prefabricated housing, graphic arts, leasing, contracting, and steel joist businesses. Unfortunately, most of these ventures were unprofitable. In 1965, Nuclear’s board filed for bankruptcy protection, ousted its president, and promoted Ken Iverson as the new president and CEO. Iverson had been hired in 1962 as general manager of Vulcraft Corporation, a joist manufacturer in South Carolina that Nuclear had acquired at that time. Vulcraft was Nuclear’s only profitable division, and Iverson had been promoted to group vice president prior to taking the top job. Iverson quickly sold off or closed four of Nuclear’s eight divisions, slashed the number of management positions from 12 to just 2 people, and decided to focus the company’s growth through Vulcraft. Vulcraft enjoyed 20 percent market share of the joist business, but it was entirely dependent on the price of steel, which was considered too expensive and sourced from unreliable sources (80 percent came from foreign steel plants). So Iverson, who was trained as a metallurgical engineer, made the historic and risky decision in 1968 to produce bar steel for Nuclear’s joist business. The company borrowed heavily to build a steel mini-mill using electric arc furnaces that melted scrap steel. Nuclear’s mini-mill experienced delays and “catastrophes” during its first couple of years, but eventually produced steel bars far below prevailing costs of traditional coke-and-iron steel mills. In response to Nuclear’s new steel plant, American steel companies canceled their contracts with the company. NUCOR’S NEW ERA With no nuclear business activity, the company changed its name for a third time in 1972 from Nuclear Corporation of America to Nucor Corporation. In 1977, Nucor expanded its business to steel decking. It also built more mini-mills, becoming the 20th largest steel producer by 1980. Other companies also built electric arc steel mini-mills, which threatened Bethlehem, Republic, and other traditional steel mills. Many of these traditional plants went bankrupt by the 1990s. In 1986, Nucor took its biggest gamble by building the first thin slab sheet steel mini-mill at a cost of one-third the company’s total annual revenues. The experimental plant in Crawfordsville, Indiana, experienced setbacks and one tragic fatality. But within four years the plant was operating near capacity, producing flat-rolled steel in one quarter of the time of its competitors and at a significantly lower cost. Nucor’s expansion in steelmaking continued unabated through acquisitions and construction of new plants. Today, with $20 billion in sales and more than 200 operating facilities (most in North America), Nucor is the largest steelmaker and the largest recycler of any material in the United States. (Nucor recycles the equivalent of one SUV vehicle every five seconds.) Except for 2009, it has been profitable every year since the late 1960s and, unusual for the steel industry, has never laid off any employees. NUCOR’S CULTURE AND WORK PRACTICES Nucor’s success under Iverson’s leadership was due in part to investment in risky technological innovations, such as building one of America’s first electric arc steel mills and developing the first flat-rolled sheet steel mini-mill. However, much credit also goes to Nucor’s productive and innovative culture and work practices that Iverson nurtured and which remain to this day. Beginning with the 1965 reorganization, Nucor has maintained an extremely lean head office, decentralizing most decisions to the local mills.