SUNIL JATHAR NUCOR at a CROSSROADS 05/12/2010

The critical issue in this case is loss in sales coupled by rising costs and falling net earnings for
Nucor.

The 1st supporting evidence in this case is the rising costs involved for Nucor in its processes. If
you look at Exhibit 6, we can see that COGS for Nucor started with 55% of sales and has grown
at an alarmingly increasing rate and grown to 81% of sales by the end of 1986. This indicates
that Nucor has not been able to garner effective sales growth and in contrast has shown rising
COGS over its lifespan. This has led to loss of earnings and hence decreased ROA for Nucor

Also, the case talks about investment on part of NUCOR into the beam segment (Yamato
Kogyo) and also the thin flat sheet segment (SMS). NUCOR is not being able to decide on SMS
investment because of loss of funds and high risks. The total investment in these two ventures
would total $410 million and NUCOR only had $185 million & few securities on hand.

Nucor has not been able to invest into new plans from 1981. Prior to 1981, NUCOR was knows
for its investment into new plants and continuous reformation of technology. But NUCOR has
been stagnant in terms for developing new technologies since 1981 and this has also contributed
to its loss in sales over time.

NUCOR had spent $6million in the Hazelett Caster but it was not as efficient as it had planned it
to be. It had led to more complex problems such as expensive conveyor belts, which required
continuous replacement and led to considerable down time and also led to some quality issues,
which eventually led to increasing costs over time.