1996 FIN – Nucor’s Correnti at MFDA: Pay in Relation to Production
November 12, 1996 FIN – It is not what you pay employees but what you pay them in relation to what they produce. Nucor Corporation vice chairman and CEO John Correnti told the Metropolitan Fastener Distributors Association.
Nucor started in 1969 and is about to become the second-largest U.S. steelmaker by decentralizing and by rewarding employees for production.
Nucor, with 1996 sales projected at $3.8 billion, has just three management layers and only 22 people on the corporate staff at the Charlotte, North Carolina, headquarters.
That means each general manager, such as fastener division president Jerry DeMars, has engineering, selling, manufacturing, accounting and even shipping duties.
“We push that decision making down to that fellow on the bolt machine or nut former who is really running his own little business,” Correnti explained.
“We are not in the business of making steel or beams or rebar or fasteners. We are in the business to make money, and that is not a dirty word. You too had better be in business to make money.”
All Nucor employees have most of their compensation based on the success of the company, Correnti explained.
Nucor employees work in teams of 30 to 40 people. Production levels are established, and financial incentives reward teams which exceed production quotas.
For example, a base wage may be $9 an hour, but production results could yield the worker $22 to $26 an hour.
“When a bolt maker breaks down the bonus is zero and it is back to $9 an hour,” Correnti said.
When paychecks come out the next week at $800 instead of $1,200 production becomes “fresh in everyone’s mind,” Correnti said.
Nucor can compete with foreign steelmakers and fastener makers because of the $40 per ton cost of ocean freight.
“There is no excuse in the world that someone from Taiwan can pay $40 a ton freight to ship it across the pond and sell it cheaper,” Correnti reasoned. “With a $12 flat roll cost today, we’ve got slave labor beat by $18 bucks. You’ll never hear Nucor crying about tariffs or imports.”
Correnti said Nucor is striving to provide “service next to none” and that if distributors can’t get the fasteners they need from Nucor they should call him at (704) 366-7000 “and I’ll find out why.” ©1996/2010 Fastener Industry News
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