History

Nucor's roots went back to 1904 when Ransom Eli Olds, resigned from Olds Motor Works, a company he had founded with the backing of venture capitalists five years earlier, to pursue his dream of manufacturing luxury motor cars instead of cheap Oldsmobiles. Olds disposed of his 10% stake in the Olds Motor Works and, with additional venture capital, founded the acronymous Reo Motor Car Company. Reo Motor Car filed for bankruptcy protection in 1938, after years of losing money on luxury cars and only partly making it up on delivery trucks. It emerged from reorganization as Reo Motors, a manufacturer of trucks and, eventually, luxury lawnmowers. Reo Motors neither made nor lost much money. In 1954, it sold off all its assets, at a 15% book loss, and-began to distribute the proceeds – approximately $16 million – to its shareholders.

Takeover prevented Reo from carrying out its plans for self-liquidation. TelAutograph Corporation won control of the company in a proxy fight and, in late 1955, merged one of its affiliates with Reo to form Nuclear Corporation of America. The company's vision of becoming the General Motors of various nuclear businesses did not, however, materialize: sales stagnated, and it lost money' each year through 1960. In 1960, two large institutional stockholders, Martin Marietta and Bear, Stearns, installed a new president, David Thomas, who turned Nuclear into a small conglomerate. Friendly acquisitions took the company into semiconductors, steel joists (beams that support ceilings) and air-conditioning ducts, and it tried to diversify into aerospace, tin cans and plain-paper copiers through internal development. By 1965, bankruptcy loomed and the board of directors initiated a search to replace David Thomas. F. Kenneth Iverson was its less-than-unanimous choice to become president.

Ken Iverson, a metallurgist, was hired by Thomas in 1962 to run the newly-acquired Vulcraft steel joist business, and later put in charge of the air-conditioning duct business as well. Upon assuming the presidency, Iverson divested most of Nuclear's businesses (including air-conditioning ducts, the largest lossmaker) and focused the company on its most profitable operation, the Vulcraft steel joist plants in South Carolina and Nebraska. Within a year, Iverson moved Nuclear's head office, which consisted of himself and accountant Sam Siegel, to Charlotte, North Carolina, to be closer to the larger Vulcraft plant in Florence, South Carolina. And in 1968 - 1969, believing that the ' company could produce the steel bars that Vulcraft welded into joists more cheaply than it could buy them, Iverson bet the company by borrowing $6 million to build a small but modern minimill to make steel from scrap at Darlington, South Carolina.

Nuclear Corporation of America held its corporate breath until Darlirtgton eventually became profitable. The company was renamed Nucor Corporation in 1972 and expanded steadily through 1986. Exhibit 6 summarizes Nucor's operating and financial statistics from 1972 -1986 and Exhibit 7 compares its stock performance with leading integrated and minimill competitors. The rest of this section describes the administrative principles and the operations and investment processes that underpin these numbers.