NEW YORK Its been six months since John Ferriola was named Daniel DiMiccos successor as chief executive officer of Nucor Corp., but if you ask him how the Charlotte, N.C.-based steelmakers strategy has changed since he took the reins, Ferriola will be the first to tell you: not much.
"When you talk about the transition in place and the leadership team at Nucor, the first thing to remember is this has been a planned transition. This has been a very, very, very robust succession plan that has been in effect frankly for several years," Ferriola told AMM in an interview in New York.
Ferriola, who joined Nucor in 1992 as manager of maintenance and engineering at the companys bar mill in Jewett, Texas, was appointed to a number of key leadership roles at the companyincluding executive vice president in 2002, chief operating officer of Nucors steelmaking operations in 2007 and president and chief operating officer in 2011before stepping into his current position.
"That (progression) allowed for a lot of things to happen. One, that allowed for me to work with Dan on a regular basis very closely for several years," Ferriola said, noting that he and DiMicco went to lunch together nearly every day during that period to discuss the company and its goals.
"We would talk about what he sees that has been important to him. What are the metrics that he looks for in the market? What does he feel is important in the role of a CEO? And, of course, it gave him the opportunity frankly to grill me on those same topics and see how that transition is progressing and become comfortable with it. So its important to remember its been a long, planned transition," Ferriola said.
"The other thing thats important to remember is Ive been part of the executive team since I came to Charlotte in 2002, so when you talk about the long-term strategic plan of Nucor, thats part of my plan," he said. "So for me to say I disagree with the strategic direction of Nucor is not going to happen because the strategic direction of Nucor that has been set, Ive been part of the team that set that direction. Youre not going to see a lot of changes in the strategic direction of Nucor."
But while Ferriola anticipates no major shift in the companys long-term strategy with him at the helm, he said the industry can expect to see some slight modifications under his leadership. One such area will involve a shift toward execution after five years of significant investment.
Ferriola noted that Nucor invested $7 billion in organic growth and expanded product offerings between the fourth quarter of 2008 and the end of 2012, including new vacuum degassers, normalizing lines, heat-treating lines and the companys wide-light project to move up the sheet market value chain, and the company expects to invest another $1 billion to $1.2 billion this year.
"So youve had this period of recession thats lasted long enough for a company that grows during recessions, invests in its assets during recessions, to invest a heck of a lot of money. You reach a point where you say, Weve invested $8 billion, weve grown the company tremendously during that period; its time to stop, focus on execution, and convert those $8 billion of investment into profits as we move into the upcycle, " Ferriola said. "So thats not a strategic change: its one thats occurring because of the timing. It has nothing to do with the change of the CEO; this was always part of our strategy."
While the steelmaker intends to focus more on execution in the coming years, additional investments could be on the table if the price is right.
"We still have a strong balance sheet, so we will always continue to be opportunistic. And as good opportunities come down the pipe, well be prepared to deal with them and well take advantage of them," he said. "Because Im saying well focus on execution, it doesnt mean to the exclusion of the right opportunitythe right company at the right time at the right price. We will be all over it, without a doubt."
In addition to a focus on execution, Nucor also will aim to beef up its commercial excellence with Ferriola in the drivers seat.
"Another area where youll see more emphasis placed is on the commercial side of our business. Without a doubt, we are known for our operational prowess. People say Nucor is one hell of an operating company, and we are. They might not say we are one hell of a commercial company; were going to change that," he said. "This is not a change in direction of our company; its not a change in our expectations of our teammates. It is an expansion of our expectation of our teammates."
Rick Blume, general manager of commercial for Nucors steelmaking group, agreed that commercial excellence will become a key focus for the steelmaker, citing a specific push to respond to market demand and make sure the company is developing the products the industry needs.
"(Its) making high-strength steels for the automotive industry, making high-strength steels for some of the other industries like oil and gas, those kinds of things. Its about being more aware of the market, developing more products for the market and, as John says, its really about creating customer value. As we ultimately create customer value, our expectation is to be rewardedto be paidfor that value," Blume said.
Likewise, the company hopes to better serve as a one-stop shop for customers as part of its new push for commercial excellence.
"Theres been a lot of focus on working together, working across our various steel mills. The Nucor structure by and large has historically been pretty decentralized. So how do we weave that together so were working together to provide a broader product package, a broader service package, for our customer base that needs that, wants that, desires that?" Blume said. "As companies want to reduce the number of suppliers from their supply base and they worry about reliability, a company like Nucor has a tremendous advantage. Thats commercial excellence."
Thirdly, Nucor will continue to step up as a leader in the steelmaking industry when it comes to regulatory and trade issues, Ferriola said. "No matter how good you are commercially or how good you are operationally, if you dont provide the industry leadership in Washington to make sure our industry has a viable opportunity to strive and grow on a level playing field, you arent going to be successful."
Ferriola said Nucor has been active when it comes to pushing for more proactive trade remedies (amm.com, July 8), and some of those discussions in Washington appear to be starting to pay off.
"Im not going to say its imminent, but its close. Its closer than it was," he said of an attitude change in Washington. "We see a growing grassroots initiative. We see it growing in Washington and we see it growing here in the states.
"People are beginning to connect the dots between buying a cheaper imported product and not having the job to buy a cheaper imported product. What was it Henry Ford said? I want to make sure that I pay each of my employees enough money that they can go out and buy a car that I produce. Well that whole thing goes out the window if that car is imported or if that person doesnt have a job to earn any salary," he said. "I do think its getting closer, I think the momentum is building and Ill tell you what else is building: the frustration of the industry."
But while the tide may be changing in Washington, at least one thing in Charlotte is staying the same: Nucors culture, Ferriola said. "The one thing I want to make absolutely certain I stress ... is that I promise you and I promise my team as well as promise my board of directors that we will not change our culture. Our belief in our teammates, our confidence in our teammates, our belief that by taking care of our teammates they in turn will take care of our customers ... that is rock solid. That will not change."