TWST: Could you start us with a brief summary description of Nucor?

Mr. Correnti: Nucor today is the second largest steel producer in the United States. Last year we shipped nine and a half million tons, and this year we'll ship in excess of 10 million tons. We're also the most diversified steel manufacturer from reinforcing bar on the very low end of the spectrum to motor lamination steel on the high end of the spectrum, and everything else in between. We're in the metals and the metals related area. We have eight steel mills. Four of them produce bar products, angles, channels, rounds, SBQ bar. We have one large structural steel mill that produces wide flange beams. It's a joint venture called Nucor-Yamato. We have three flat roll mills at Crawfordsville, Ind; at Hickman, Ark; and at Berkeley South Carolina that produce flat roll steel, hot band coils, cold rolls, galvanized, 409 stainless steel, pickled and oil, etc. And now we're currently starting construction of our ninth steel mill in Hertford County, North Carolina, which will produce plate steel, three-eighths of an inch to two inches thick, up to 120 inches wide. In addition, we have three cold finish plants for cold finish bars. We have six joist plants for steel joists, five deck plants, two pre-engineered building plants, a grinding ball plant, and a non-precision bearing plant. In total we have about 7000 employees, and total revenues of about $4.5 billion.

Key Trends

TWST: What are the key trends or issues in your industry today? What are you facing and how are you addressing those issues and trends?

Mr. Correnti: Currently, the biggest trend is imported steel. Normally, the U.S., in a good economy consumes about 120 million tons a year of steel. And if everyone in the country who currently produces steel runs at capacity, it's about 100 million tons of capacity. So we have about a 20 million ton shortfall. Unfortunately today, at the rate that imported steel is being dumped and I repeat that dumped into this country. It's coming in at a rate of about 45 million tons per year. And it's coming in from Japan and Korea, and from Russia and the Ukraine. And basically because of the meltdown over in the far east, and the financial situation over in Russia, it's being brought into here at prices, not only far below what they're selling that same steel in their home market, but far, far below what the cost of those countries is in producing that steel. We've dropped prices close to 30% on flat roll steel in the past four and a half months.

TWST: Has there been no response to this market?

Mr. Correnti: No, there hasn't been. The commerce department and the international trade commission are reviewing it right now. But it's really causing difficulty, not only for Nucor, but all steel manufacturers in general. Nucor has long been noted as one of the most efficient lowest cost producers in the world. When steel can be brought into this country with $40 to $50 of freight on top of it, and sold at prices $50 to $100 a ton below our price, there's concern by everybody.

TWST: How do you adjust short-term and long-term to that occurrence?

Mr. Correnti: Short-term, you try to be the lowest cost producer and to maintain your margin. Obviously you're going to have much less margins. We're not going to sell anything below our cost, but it sure does affect earnings in the short term. In the long term you can't let financial situations in other countries really affect you because it would be a knee-jerk reaction. So in the long-term, what we strive for is we try to continue to build steel mills as economically and as quickly as possible, and then get them up and running with high productivity, and be the low-cost, high quality producer of steel in the world.

TWST: What are the current capacities and utilizations that you have? How do you anticipate that your construction will change those capacities and utilization figures over the next three to five years?

Mr. Correnti: Our capacity, as I say, right now is about 11 million tons. After we're done constructing the new plate mill our capacity will be closer to 12 million tons. And that plate mill will take about 18 months to build. So we're looking to the year 2000 before that is up and running. Normally we try to run our plants at 100% capacity, and we do that by adjusting our prices so that we can do that. As I can say right now we're pretty low on our prices. We're still making money, but we're running on the skinny.

TWST: Are you a build-on-demand system at this point?

Mr. Correnti: Yes, demand is still very good. The economic scenario in the United States is still very strong. The construction market is good. Consumer confidence is still high, so the people are buying automobiles. They're buying washers, dryers, refrigerators. They're building new houses, moving into new apartments. So from the demand part of the equation, with one exception that I'll mention to you, the demand for steel is still pretty good. The exception is that oil and gas have slowed down a little bit, and that's mainly because the price of oil is down. So the exploration and the rig count has gone from the high 900s down to the low 800s, which means that less drill pipe is consumed, and from a demand standpoint, that hasn't bode very well for the steel industry. But other than that, all other segments of the industry are still very, very good. Construction is 55% of the steel demand, and that is high-rises, bridges, the Highway Bill, the Transportation Act, locks and damns. Everybody seems to be building a new stadium around the country for their sports teams. So that's going to bode very well for the steel industry.

TWST: Information technology and management's information systems are so critical today. What is the state-of the-art at Nucor? Where do you stand out? What areas are you focusing on to improve?

Mr. Correnti: We don't stand out at all from anybody. A lot of people think, oh, I have to have the latest bell and whistle in order to be efficient and I think a lot of it is the proponents of these people who are selling software, and systems, and I don't even have a computer screen behind my desk. I still want to talk to people on a face to face basis, or over the telephone, and I don't want to communicate with them via e-mail, or via the computer, and we want to keep the personal touch with our customers and with our suppliers. Unfortunately, I think, America is moving away from that because of the advent of the computer and e-mail, and voice mail, and everything else.

TWST: Other than facing the threat from the imports, what are the other constraints or limitations that you're addressing and how are you addressing them over the next two to three years?

Mr. Correnti: It's in growing the market, and the steel industry grows very slowly, but there are certain markets which we haven't untapped, and I can name a couple of them. For instance residential construction, most of residential construction is still done with lumber and with wood, whereas commercial construction today is all done with steel or with concrete. So our competition in the flat roll arena is aluminum, plastics and composites in a car. In the construction area it's wood and concrete. So our goal is drive down the cost of producing a ton of steel, and make it thinner, make it stronger, and make it the material of choice, both from a quality standpoint, and a cost standpoint. Getting back to the residential construction, the average 3000, 4000 square foot house would take about six and a half tons of steel, if it were all built entirely out of steel. And at 1.4 million housing starts, that's a potential, a potential 9 million ton market, which is virtually untouched. The other thing is, from a quality standpoint, if you were to go to a lumber yard today and buy 20 2x4s, wood 2x4s, I'm sure you would be lucky to get five or six that are straight. The rest are curved and warped, and have knots in it, and that's because most of the lumber today is not harvested from old growth lumber. It's all new growth lumber, and the quality is down. The other thing is, from an environmental standpoint, that 4000 square foot house I referred to earlier, if you want to build that, go cut 55 trees down. My alternative is about six junk automobile bodies, which are recycled scrap, which are recycled into new steel. So from an environmental standpoint, you can hit the market that way. The same thing, with steel you don't have to worry about termites. When the hurricane Andrew went through Florida, the only thing standing down in Homestead, Florida were three steel framed houses. So from a safety standpoint, maybe you've seen some of these Steel Alliance adds. All the major steel companies in America joined together to inform the consumer. Not to inform General Motors or Chrysler, or Fridgedaire or Maytag, or anything else, but to inform the American consumer. When we get our story out as a steel industry, American consumers are very, very savvy, and very, very smart. When you tell them the story, they'll make the right choice. I'll throw my hands, and I'll throw our company in their hands, and they'll buy more and more steel. So that's what we're trying to do. We're trying to get the mother when she goes into the car dealership, the second question she asks after what's the price is are these doors on this automobile steel reinforced? Here again, that bodes to the safety consideration. You know, I want safety for my children. So I think steel has got a bright, bright, bright future.

Mergers/Acquisitions

TWST: In discussing growth, it's always new plants, new manufacturing facilities, or new processing facilities. Is there room for acquisitions or mergers with Nucor?

Mr. Correnti: No, and I said that pretty fast. We like to do greenfield for two reasons. Number one is when you do it new, you're putting in 1998 or 1999 technology. You're not buying somebody's old technology, whether it's from the 1950s, the 1960s, or the 1970s. The other thing, which is more important than the technology is the Nucor culture, and that is the management and the employees that you put behind that technology that enables you to come across that finish line first, second or third. The analogy I use is anybody with money can buy the same technology, the same equipment that Nucor has. It's not proprietary. It's not patentable, but it's like you or I, or your readers buying if you are a car fan, if you bought Dale Ernhart, or Jeff Gordon, or Mark Martins race car, it's the same technology they use, but what really counts is who you have behind the wheel of that car, and who's driving that car. And that's what it takes in the steel industry. It's the employees and the management that you put behind that new technology that enables you to cross the finish line first, second or last. And obviously in our case that's how much profit you make, and how you treat your customers, and how you run your business.

TWST: Viewing Nucor as a value-added situation to steel production, what about leveraging that brand into NAFTA or into other emerging markets?

Mr. Correnti: The question is can you transfer that culture into another market. I'll tell you, with some of the emerging markets I'll do the arithmetic for you very quickly. A third world country is not interested sometimes in building a steel mill, spending $300 or $400 million for a 1 million ton steel facility that employs 300 people. They want a steel facility that employs 3000 people. Well, I'm sorry, you're just not going to do it with 3000 people. There are other places in the world. Let's take some places in Europe. They shut down for July and August. The Germans I don't think want to work 30 hours a week now, or 34 hours a week. So you have to pick your spot. I think that certainly there are places in the world where the Nucor culture can be transferred, and can be transferred selectively. But it would have to be done very, very, very carefully. Maybe it's cheaper, and maybe it's better, and maybe it's more productive to build a steel mill in the United States, where normally utility costs are cheaper, where the raw material scrap is readily available, and then to export the steel to these other countries.

TWST: You mentioned the infrastructure within this country is a prime market for steel over the next 20 years. What is the status of the infrastructure in North Carolina that you are relying on for energy for transportation for personnel? Do you feel that is a strong market in those respects or are there needs in that area?

Mr. Correnti: I think that just the Transportation Act. Your readers have probably read the same stories that I have, that 15% to 20% of the highway bridges in this country are substandard, and maybe another 50% have to be worked on within the next 20 years, as loads become greater across the highways, etc. The same thing with the infrastructure. If you move from the East Coast, right across the country to the West Coast, it gets a little bit better as you go West because it's all newer. But you just think of the subway systems, the rapid transit systems, the utility systems, whether it be water or sewer, and some of these were built in the early 1900s, in the 1920s, and the 1930s. And those kind of things don't last forever. They have to be replaced or be repaired. So I think as far as public transportation, and public utilities, whether it be the water system for New York City, or the sewer system in Cleveland Ohio, or in Chicago, those systems now are becoming 50 years old, or 60 years old, and they need to be repaired and be replaced. Of course that's going to bode very, very well for the steel industry.

TWST: What advantages are you finding structurally by having your centers mostly in North Carolina?

Mr. Correnti: Our headquarters are in North Carolina. Our steel mills are nowhere near North Carolina. Our steel mills are in Utah, Nebraska, Texas, Indiana, South Carolina and Arkansas. So we serve the whole country. So there's no one segment of the country that has a larger demand than another segment of the country. So we've got the whole United States covered. The new plate mill is going to go on the North Carolina, Virginia border. That's the plate facility though. But that's a specific product that goes into rail car building, ship building, barges, oil drilling rigs, etc., things like that.

Management

TWST: Looking at your top management team, what are the skill sets and strengths that you have there today? Give us a frank assessment. What needs are you looking at? Are there changes or additions over the next two to three years?

Mr. Correnti: Not many. I like to brag on one thing. Nucor is a $4.5 billion company, and we still have total corporate headquarters that has 23 people in it, and we're in about 18,000 square feet of rented office space in Industrial Park in the southern part of Charlotte, North Carolina. So this company does not waste a lot of money on corporate overhead, or frills, or anything else like that. The kind of people we're looking for are common sense managers who have very good communication skills. And that's what it takes. You have to have leaders who can communicate with your employees, and with your customer, and you can communicate face to face, and don't have to communicate through a bunch of attorneys, and with a bunch of legalese, whether it be with a customer or with a supplier, and who can still do business on a handshake, and their word is their bond. And that's the type of individuals that we're looking for. We're looking for decision makers, people who are not afraid to make decisions. And we encourage that in our company. I wish more people in corporate America would do that. I think there is so much unproductive work that is done. Let's call it cover your behind type stuff, and that is memos, and meetings, and memoranda, which all it does is cover your behind in case the decision was wrong. The analogy I like to give is Babe Ruth used to be the Home Run King, but he was also the Strikeout King. And that's the kind of employees we look for at Nucor. We want guys who want to get up to the decision making plate and swing for the fences. And Gosh Darnit, they're going to hit a lot of home runs. When they hit those home runs, it's going to make a lot of money for Nucor Corporation. But also, the price you pay for the home runs is you're going to get a few strikeouts, and those strikeouts are going to cost money for the Nucor Corporation. The people that don't work out with us are the ones that are afraid to get up to the plate, or only want to get up once or twice in the game. We want people who want to get up there 10 times, or seven times, if possible, during the playing of the game, and are willing to make those decisions which will ultimately make money for Nucor Corporation. The other thing is that you have to have management whose ideals, whose needs, are in sync with the hourly employees who are really the ones that are making the money for the corporation. And those are the young men and young women who are making the steel, and rolling the steel, and shipping the steel, and selling the steel. They're the ones that really do the job. And if you can align their needs and their wants with the management's needs and wants you don't need a union. You don't need a bunch of rules and regulations, and a bunch of policy manuals, and you don't need time clocks, and you don't need vision statements, or mission statements, or anything else. You just need to communicate on a commonsensical type basis, and everybody succeeds. The results in Nucor have spoken for themselves. Yes, we're a $4.5 billion company, but I can tell you, we act, smell, look and feel like we're a $200 million revenue a year company.

TWST: If you could look over the shoulder of an investor as they review financial reports and look at your statements and other announcements, what would you suggest they focus on? What would you be looking at as far as key items or key sets of information to gain insight into where you're going and what you're doing?

Mr. Correnti: Number one is to look at the track record. Now, that's looking in the rear view mirror. I understand that, but look at the track record. Number two is look at the management of the company. Number three is you've got to be able to read a balance sheet. Look at the balance sheet. There is virtually no debt. The only debt we have is industrial revenue bonds, which are at very low interest rate. And why that's important is that we're still a growth company, but we're still in a cyclical industry. When you get to the trough of the cycle, those that are encumbered with a lot of debt don't get forgiveness. So from a cost standpoint, because of that debt, their cost to produce that ton of steel is much higher than a company that has virtually no debt. Also, when you look at that past history in Nucor, the company is not going to grow 25, 30% per year, both top and bottom line because we're a much larger company, and the percentage is much, more difficult. But we certainly feel comfortable with 15% growth. That's both top line and bottom line, averaging out over a five year to ten year period. And granted, some years it might be a little bit slower, but when you bring a new steel plate mill on in the year 2000, it will be a little bit higher. So that's what you have to look at. How secure is my investment in a company like Nucor? And it's tough today. A lot of investors, I think the sellside analysts understand Nucor very well. Unfortunately some of the buyside people, there are some who understand it well, but steel is looked at like an old rust belt, antiquated, no growth, slow growth industry, whatever buzz word you want to put on it, And if it's not in computers or something, I kid people. I say if our stock price doesn't get a little bit higher, we're going to change our name to Nucor.com., and we're going to be in the steel chip business.

TWST: What insight would you draw most attention to for steel analysts at this point? Where is the underperception? Where is, if at all, the misperception?

Mr. Correnti: I think the misperception is that people think we're not going to grow anymore. And also the misconception is that we're so large now, being the second largest steel producer, that we're subjected to some of the problems of some of our other larger competitors who have a lot of legacy cost, who have a lot of burdensome union contracts, and a lot of fixed cost. Whereas with Nucor, yes, we may still have large fixed costs, but we have much, much more of variable cost, so that we can react to market circumstances. We talked about earlier that we can lower the price of steel, $50, $60 a ton and still make a buck, whereas our competitors can't even come close to that. And the other things is that times have been awfully good in the steel industry in the last five to eight years, and the comparison between Nucor and the rest of our competitors certainly doesn't stand out as much as it does in the slow times and in the trough of the cycle. Whereas the day that we produce small black numbers, all our competition will produce large red numbers. But I think one misperception is that we're an old, lethargic, large steel company. We are a big steel company, but as I said, the thing that I want to stress is the comment I made before. We are still nimble, and we're still lean, lean, lean, and we still act, smell and feel as we're a $200 million company, and we fight everyday for every customer, and we fight everyday to continue to lower our costs, to increase our quality. At the end of the day the strongest is going to survive. And that gets back to our balance sheet, and it's stronger than anyone's in the country, as far as the steel industry is concerned. But if you're asking me how do you get somebody to buy Nucor stock rather than Yahoo, or Amazon.com, I can't answer the question. All I can tell you is I don't think we're the flavor of the month, or the flavor of the week, but that will change. That will change.

TWST: Give us your summary statement. What is the essential message that you would convey to individual and institutional investors? Over the next two to three to five year time frame, what are the strengths and advantages that distinguish and recommend Nucor as an investment today?

Mr. Correnti: My recommendation is at the end of the day, when you look at the numbers, and if you're going to invest in a stock, and you want your investment safe, and you want it with a company that is going to protect your investment and grow, and not lose it, Nucor is the stock to invest in.

TWST: Thank you.

JOHN D. CORRENTI Vice Chairman, President & CEO Nucor Corporation 2100 Rexford Road Charlotte, NC 28211 (704) 366-7000 (704) 362-4208 - Fax

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