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Business Observer Friday, May 3, 2019 6 months ago

Steel giant's new $240M plant packs promise

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Nucor’s new micro-mill is a macro deal for the region — in jobs and more jobs. The company will also import its rock-solid culture.
by: John Haughey Contributor

On a red-dirt road framed by Ben Hill Griffin’s orange groves south of Frostproof, there’s a new billboard facing U.S. 27. It reads: “Now Hiring. Join The Best Team In Steel.”

Nucor Corp. didn't break ground on its $240 million micro-mill in Polk County until April. But the nation’s largest steelmaker has been generating buzz and excitement, with that billboard and other marketing, since late 2017 when it announced the 400-acre site had been selected from among 60 locations across the Southeast for a new plant.

By next summer, Nucor Steel Florida will produce some 350,000 tons of steel rebar a year and employ a workforce of 250 with average annual salaries of $66,000 — nearly 50% higher than Polk County’s median household income. “It’s the most interesting project, and largest capital investment, by an employer in Polk County in years,” Central Florida Development Council President and CEO Sean Malott says.

The last comparable single capital investment in Polk County was the 1975 opening of the New Wales phosphate plant in Mulberry, now operated by Mosaic Co., that created about 300 jobs. The most recent was Coca-Cola’s $113 million bottling plant in Auburndale in 2003, which brought about 100 new jobs.

It took more than $1.5 million in state/local tax credits, and “a big infrastructure commitment” from local governments and Duke Energy, to seal the Nucor Steel deal. Malott says the family-wage jobs with benefits Nucor offers justifies the incentives.

“These are great jobs. You don’t necessarily need a college degree, just a technical aptitude and a capacity for hard work,” Malott says. “But what really impressed me is they’ve never had a layoff. They take care of their people.”

That’s true: since its 1897 establishment as an automaker to its current iteration with more than 25,000 employees at more than 200 North American sites, Nucor, says Nucor Steel Florida Vice President Drew Wilcox, has never laid anyone off.

Even better: The jobs it creates create more jobs, Wilcox says, because the steel it makes make the roads, bridges and buildings that builders use to build with. “Our 250 full-time jobs are direct jobs at the mill,” he says, “but one direct job at a steel mill can employ up to seven other jobs in the rest of the local economy.”

Any investment in an industrial operation is a calculated risk. But Nucor’s plant — which will require 450 workers and 18 months to build — is more statement than speculation that Florida’s construction industry has recovered from the 2007 recession and is poised for growth, with Polk County ideally situated to benefit.

Makes sense, then, that Nucor’s operative credo is, essentially, if you build it, they will build with it.

LOCAL STEEL,  LOCAL NEEDS

Charlotte, N.C.-based Nucor recycled 19 million tons of scrap metal into 27 million tons of rebar to generate $20 billion in 2017 sales. Even before President Donald Trump imposed a 25% tariff on imported steel last March, U.S. demand for rebar was projected to be $155 billion by 2021, according to a Research & Markets analysis.

‘We are building this rebar micro-mill in a great and growing market where demand is strong. Local rebar production will meet local rebar demand.’ Drew Wilcox, Nucor Steel

In the last year, the U.S. steelmakers have added 2,400 jobs and increased production 5%. Both remain 40% below the industry’s 1990 levels but the sector’s recovery should accelerate as shuttered mills reopen, existing plants expand and new plants come online.

Nucor, which is also building a micro mill in Sedalia, Mo., needed to come to Florida because Florida needs steel, Wilcox says. “Florida has strong demand for rebar but few steel producers located locally, meaning much of the rebar demand is met by out-of-state producers,” he says.

That provides a competitive advantage, Wilcox adds, saying the Frostproof plant “will be well-positioned to supply the biggest markets in Florida for rebar,” which includes the area from Orlando to Tampa and south to Miami. Says Wilcox: “We are building this rebar micro-mill in a great and growing market where demand is strong. Local rebar production will meet local rebar demand.”

Wilcox says Nucor chose the Ben Hill Griffin orange grove because of its proximity to a highway, U.S. 27, and railroad tracks, with the nearby CSX line.

The plant requires an electrical utility that can deliver “a heavy energy load,” he says. Duke Energy will upgrade a nearby station to meet that need. The plant also must be near “an abundant supply of the scrap metal,” Wilcox says.

Nucor owns Ohio-based David J. Joseph (DJJ) Co., which employs 650 at 23 Florida scrap metal recycling plants. Most scrap will come from DJJ but locals, such as Lakeland’s Allied Scrap Processors, could also provide mill-ready materials.

“Locating in Polk County made sense,” Wilcox says. “Building a mill here will give us a significant transportation cost advantage over out-of-state competitors. It will also shorten the supply chain for our customers and cut down on delivery times.”

Calvin Knight. Nucor Steel selected a 400-acre site in Polk County from among 60 locations across the Southeast for a new plant.

THE PLANT

Polk County isn’t only getting jobs with this plant, but innovation. In his 26 years at Nucor, Wilcox, for example, says one of the biggest innovations has been transitioning from blast furnaces to electric arc furnaces (EAF). “Our mill will be an EAF steel mill,” he says, “currently the most efficient way to produce steel.”

It will be a relatively small, focused operation, Wilcox says, compared to Nucor’s South Carolina bar mill, which produces 1 million tons annually. “Our mill will have about one-third of that capacity and only make rebar targeted to demand in Florida.”

Metallurgy, chemistry, compounding and automation sustain a constant need for innovation in production and products, Wilcox says.

“We continue to find ways to innovate and be more efficient in how we produce steel and handle raw materials,” he says. “EAFs are making grades of steel no one thought imaginable 20 years ago. Like every other industry, technology is changing the way we do business.”

But Nucor does business the old-fashioned way when it comes to who does its business.

THE PEOPLE

Wilcox says Nucor will hire its first workers this summer. Polk State Corporate College will coordinate in providing workforce training. Among things employees must learn is Nucor’s culture, where there are no workers, only “teammates.”

“Teamwork is one of the most important values at Nucor. That is why we refer to our employees as ‘teammates,’” Wilcox says.

F. Kenneth Iverson, a metallurgist-turned-businessman who took Nucor from near-bankruptcy in the 1960s to become the nation’s largest steelmaker, developed Nucor’s business model and management practices.

“Business practices he set up — from egalitarian benefits; to few layers of management; to driving decision-making down to frontline teammates; to utilizing a pay-for-performance system — are still in use today,” Wilcox says. “Nucor’s culture is central to our success and Ken developed that culture — an entrepreneurial culture that drives continuous improvement.”

Adds Wilcox: “Teammates aren’t at the bottom of a pecking order but on the ‘frontline.’ We believe our frontline teammates know the production process best and we give them a lot of decision-making authority.”

A pay-for-performance program ensures teammates learn — and care about what they learn.

“We pay them weekly bonuses based on the number of quality tons, safely produced,” Wilcox says. “This gives every teammate the incentive to find ways to work more safely, become more efficient, improve production capabilities and make better products.”

To get ahead at Nucor — or anywhere — Wilcox suggests reading Iverson’s “Plain Talk: Lessons from a Business Maverick.”

But while the culture keys Nucor’s success, Malott, at the Central Florida Development Council, suspects Wilcox would rather turn scrap metal into rebar than discuss  business philosophy. “He’d love to be producing steel right now,” he said. “They’re itching to break ground, extremely anxious to get started.”

(This story was updated to reflect the correct number of total employees at Nucor.)  

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