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Thursday, February 22, 2024

NC trend: Heavy metal, Nucor turns up the heat

Nucor, the largest U.S. steel maker, plans a $350 million mill in Lexington, its first manufacturing expansion in North Carolina since the 2000 opening of its Hertford County plant. Unlike that remote location near Ahoskie in eastern North Carolina, the Davidson County site was chosen because it is 3 miles east of busy Interstate 85, which provides good access to scrap metal yards in Gastonia, Monroe and Whiteville, CEO Leon Topolian said. When Nucor opened the Hertford plant, it had annual revenue of $4 billion, compared with last year’s total of $36.5 billion.

The new site will produce rebar, a material to reinforce concrete for bridges, roads and buildings. It is being facilitated by as much as $19 million of state incentives, less than offers from South Carolina and Virginia.It is slated to open in 2025 with as many as
200 workers, who will receive estimated annual compensation of nearly $100,000. That’s more than double the Davidson County average of $45,000.  

The $350 million isn’t a big bet given Nucor’s momentum. Capital spending totaled $1.6 billion last year. In January, it announced a $2.7 billion sheet mill in Mason County, West Virginia, marking the largest construction project in company history. In February, it said it would spend $290 million to expand its mill in Crawfordsville, Indiana, and it bought a majority of California Steel Industries for $400 million.

nucor reboundLast year, Nucor reported pre-tax income of $10.3 billion, which compares with a total of nearly $12 billion during the four previous years combined. The previous annual record was $4 billion in 2018.

The profits stem partly from a surge in the spread between what it costs to produce steel and how much Nucor charges. That spread averaged about $380 per ton between 2012 and 2017, then increased to about $440 in 2018-19 and soared to $726 last year, according to the company.

Topolian told the Charlotte Business Journal that he’s looking at acquiring some N.C. manufactures beyond Nucor’s core steel-making business. “We’re not going to go into sock making,” he joked.

Charlotte-based Nucor shares have returned 222% in the past three years, including dividends, through mid-April. That is fourth-best among N.C.-based public companies, trailing Piedmont Lithium, Cornerstone Building Brands (which is being acquired by a PE firm), and Ingles Markets. The S&P 500 has gained 59% in that period.

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

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