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Feature: Nucor CEO Ferriola says company aspires to be the 'Amazon' of steel

  • Author
  • Joe Innace
  • Editor
  • Richard Rubin
  • Commodity
  • Metals

New York — "We want to be the Amazon of the steel industry," says John Ferriola, outgoing chairman and CEO of Nucor, widely regarded as the market-leading US steelmaker.

The comment, taken alone, and told to S&P Global Platts on the sidelines of the World Steel General Assembly earlier this week in Monterrey, Mexico, could be perceived as brash and bold. That's because Nucor is the dominant market player in the US and the 12th largest steel producer in the world, with 25.5 million mt of crude steel output in 2018, according to worldsteel data.

Retiring December 31, Ferriola acknowledges, however, that it's not about Amazon-like size and market domination, but about customer service and retention. This is why he counts digitalization as one of his three most important and proudest achievements of his five-year tenure as Nucor chairman and CEO.

"We want to make our customers more sticky," Ferriola said. "We're not there yet, but that still is the goal."

He cites rebar as an example: "So somebody who buys rebar on a regular basis, you click in and see 'Last time you were here you bought 150 tons of No. 2. How's your supply of No. 2 doing?"

Ferriola allows that buying steel with one-click ease might be elusive. "But we can certainly make it easier than it is today," he said. " And the easier we make it for a customer to buy, the more they will buy."

By no means is Nucor the only steelmaker seeking to use the digital world to make life easier for customers. But Ferriola maintains that the company's product diversity and geographic diversity give it a distinct advantage over others.

Nucor's digitalization drive also means better communication among all its mills, Ferriola said.

"It gives us better ability to look at inventory quicker and to be able to tell our customer, 'Well, we don't have 2x2 x 0.25-inch angle here, but we got it in Nebraska. We can get it to you tomorrow,'" he said.

Ferriola credits former Nucor's chief digital officer and executive vice president, Joe Stratman, and a team of about 150 with advancing the company's digitalization to improve decision-making. (Stratman retired in June and Ray Napolitan became head of Nucor's digital initiatives.)

DEALING WITH A DELUGE OF DATA

"I told the team: 'I'm drowning in a sea of data, and yet I thirst for knowledge,'" Ferriola recalled. And the flood of data became even deeper with every acquisition Nucor made.

Ferriola doesn't remember the actual number of different computer systems the company had inherited, after acquisitions such as the former Trico Steel in Alabama, Gallatin Steel in Tennessee and others.

"We had all these different systems that couldn't communicate with each other," he said.

Accounting, for example, was a "nightmare." Something as simple as credit approval suddenly became arduous. Customer credit approvals all had to be done individually because the mills' systems could not communicate with each other.

"That's all behind us now," Ferriola said.

SAFETY FIRST, AND THEN COMMERCIAL

For all the strides made in digitalization, Ferriola still ranks two other achievements ahead of it. Safety, which he says he "really worked on to take it to another level," tops the list. Following that is a sharper focus on the commercial aspects of the business.

"We were always an excellent operating company," Ferriola said, adding that there was a time Nucor was unconcerned about marketing because of its position as the lowest-cost producer in the US.

"We didn't have to worry about commercial excellence. Hey, if we wanted to sell out, we dropped the price 10 bucks and we'd still make 50 dollars per ton over our competition," he said. "But as our competition became 'children of Nucor' and took on the culture as well as they could -- they never quite matched it -- but they got better; and as the competition got better we had to become as good commercially as we were operationally."

-- Joe Innace, joseph.innace@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com