[TAPE 1, SIDE A]

KENNETH IVERSON:

Downers Grove was at that time a city of about 10,000 people that was about thirty miles west of Chicago. My father's main place of business was at Cicero with the Western Electric installation there.

JOSEPH MOSNIER:

As a young man, I presume you attended public schools in Downers Grove?

KENNETH IVERSON:

Yes, I did.

JOSEPH MOSNIER:

As you were charting your educational course coming out of high school, what sorts of ambitions did you have in front of you? What were you looking down the road to think you might do?

KENNETH IVERSON:

When I graduated from high school, I thought about being an attorney. I graduated in 1943 and the Navy at that time had a program for students where they put them through college. It was called a V-12 program. You went through college very, very rapidly. I graduated in 1943. I had a commission in the Navy and a degree in mechanical engineering and was sent overseas in 1945.

JOSEPH MOSNIER:

Where did you go with the Navy?

KENNETH IVERSON:

Where did they send me then? They gave me a commission to report to John Rogers Field in Hawaii, Honolulu. I don't think I was twenty yet.

JOSEPH MOSNIER:

Did you go on from there to—?

KENNETH IVERSON:

I was in Johnson Island for six months. I was in the Navy for a total of over three years. I got a discharge from the Navy as a Lieutenant JG and subsequently went to Purdue for a master's [degree] in mechanical engineering.

JOSEPH MOSNIER:

I suppose this is a question you've fielded a number of times. Were there key values or aspects of your character that emerged from these experiences — childhood, family, education, Navy — that would be at the center of who you were as a business leader?

KENNETH IVERSON:

I'm not sure I can answer that. You're not aware always of the affect of the experiences on your evaluation of business or your ambitions. My father died when I was in high school. So that I had really to—. I was married when I was getting my master's degree. My objective at that time was to gain business experience. When I graduated with a master's, they asked me to continue on and get a Ph.D., but I didn't feel that I wanted to. I looked at a number of companies, and the one that really intrigued me the most was doing research for International Harvester at that time. I ran an electron microscope and radiography. Those were my interests, and I did that for about five years. I was the assistant to the chief research physicist. I didn't want to spend my life doing that, so I left and became a manager in a small company called Illium Corporation, which was making specialty alloys.

JOSEPH MOSNIER:

That was the first step over into metallurgy and foundry.

KENNETH IVERSON:

Yeah. Although there was metallurgy work in the electron microscope. There was a lot of metallurgy.

JOSEPH MOSNIER:

When was it that you realized that work around metallurgy, foundry science and ultimately steel down the road—. Was there ever a point that you decided this was very much the career that you wanted to pursue? Was that coming out of your years at Purdue?

KENNETH IVERSON:

It was in my going to Purdue because I had been an aeronautical engineer and aeronautical engineers at that time would spend about seven years at a drafting table before really getting responsibilities, and I just wasn't interested in doing that. Metallurgy as such was very empirical. When you designed an engine, you made the design and then you multiplied the

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part by four times that strength, or something, just because that worked. There was not a lot of pure scientific theory or exercise or mathematics at that time in metallurgy. Metallurgy was still very much the type of red glow that gave you what you wanted when you heat treated something. Heat treating temperatures and the physics reasons behind it weren't all that clear.

JOSEPH MOSNIER:

Between your work at International Harvester and finally Coast Metals, you worked in several different places. How did you chart your course through these early professional experiences?

KENNETH IVERSON:

Well, it was where the opportunities were and where my interest was. I left International Harvester to go with a small company, Illium Corporation in Freeport. That was a foundry and a five-car garage. It really was. But it made an alloy illium that was used to extrude cellophane through sulfuric acid, so it was highly specialized type of operation. I left there and went to—. Let's see, after Illium I went to—

JOSEPH MOSNIER:

Was it Cannon-Muskegon at that point?

KENNETH IVERSON:

No. There was one in between. The one in Valparaiso, Indiana. Made alnico magnets. Then I went to Cannon-Muskegon subsequently. I'll have to think.

JOSEPH MOSNIER:

Early fifties, I think.

KENNETH IVERSON:

Yeah. Early fifties.

JOSEPH MOSNIER:

Tell me how you found your way to Coast Metals.

KENNETH IVERSON:

I was approached by Coast Metals to take a position as the Executive Vice President by one of the big owners. There were three principal owners. It was also a specialty induction melting shop that was making blades and vanes and wire that was variety of special cobalt, nickel, iron based alloys. I ought to go back a little bit. Meanwhile we had experiences in Cannon-Muskegon that were very unusual. We had one at the first factory vacuum melting

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furnaces in the United States. We did vacuum melted uranium and a beryllium crucible, beryllium oxide crucible for the Nautilus. We were involved in a lot of very special alloys and projects. But after a while I felt I need to do something different, so I went to Coast Metals. I wasn't there that long. They got into a dispute. I had some stockholders who wanted to give me some options on shares of the company and one of the main stockholders objected and said that if they did that he would instituted a [law] suit. I decided I didn't want any part of that, so I left. At that time Nuclear Corporation of America had been trying to buy Coast Metals. I had permission from the directors and I would work with various companies that were for sale and look at them on the weekends or during vacation periods or with time off. I looked at a number and they were a Johnny-come-lately conglomerate, I guess you'd say. Fnally I saw this one Vulcraft Corporation in Florence, South Carolina where it was being run by the widow of the man who had started it. I must have looked at dozens and said no it really wasn't a very good idea. This one I thought had a lot of promise making steel joists. I suggested that they go ahead and buy it. They did.

JOSEPH MOSNIER:

Let me ask you about this process by which you scouted for them and looked at potential targets — companies to buy. I presume you went out in the field and kicked the tires a little bit.

KENNETH IVERSON:

Oh, yeah. I went through the plant and talked to them and looked at the financials and all the rest on a number of companies.

JOSEPH MOSNIER:

Around this time — '62 — you were thirty-seven years old. Had you traveled much in the South?

KENNETH IVERSON:

No. I had not up until that time. Now some of those were in the South, but the joist plant was the first one that was really concentrated — only concentrated — in the South.

JOSEPH MOSNIER:

In reading some of the various materials on the company in your book, I was absolutely dumbstruck to see that in 1965 you knocked the walls out between the segregated locker rooms.

KENNETH IVERSON:

Oh, yeah.

JOSEPH MOSNIER:

How did you manage—?

KENNETH IVERSON:

It was earlier than that wasn't it?

JOSEPH MOSNIER:

Oh, I beg your pardon.

KENNETH IVERSON:

'64, yeah.

JOSEPH MOSNIER:

In fact make an important point. I misspoke about the date. It's earlier than that and that's very important because the Civil Rights Act hadn't passed yet. First of all, how do you take the measure of the situation — the stark racial divide in the South — and then decide that as a manager you're going to put yourself in the middle of that and manage the aftermath? How did that whole story unfold?

KENNETH IVERSON:

It started to unfold probably because we put an addition on the plant. We were having a weekend in which everybody was going to go through. I had not really been that conscious that there was even any conflict until the head of public relations at that time for the company came in and said, "We're all set. We have the carpet ready and the lines going down and the tent to give them all ice cream cones and cokes after they've all been through. I've only got one question from you." He said, "Mr. Iverson, when are we going to take the niggers through?" That's the way he said it. I never thought of it that way. It took me up short. I said, "Alfred, I don't know. I'll get back to you." I didn't even know it was an issue. To me it was completely alien. I got the plant manager on the phone and I said, "What's this about taking the Negroes through at a different time?" He said, "Oh, that's the old foolishness. We can take them

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all through together." So we did. We had the blacks and whites and everybody going through with their kids and their families. It was a great success. I never even had been involved in any racial problems before. That was my first experience with them. When I went there they also had a white Christmas Party and a black Christmas Party. They were separated. As the head, as the Chief Executive Officer of that, I had to go to both. I did. I think it was for two years and then we just cut it out all together. We never had any problems — racial problems — to speak of.

I remember in Florence — when I moved there — they had a white's high school and they had a black high school. I was invited to speak at the black high school to the students. The people who were around me — some of the whites — said, "Oh wait until you see it. It's new and they've torn it all apart and it's such a mess you'll never believe it." So I drove out there with some expectations that were inaccurate. It was as new and as clean and as well kept and as swept as any place you've ever been in. I was very, very impressed with them. I gave my talk and that was that.

JOSEPH MOSNIER:

Were there any African-Americans in Downers Grove when you were a child?

KENNETH IVERSON:

I think there were a couple.

JOSEPH MOSNIER:

May have been a couple at Purdue when you were on the campus.

KENNETH IVERSON:

Oh yeah. Sure.

JOSEPH MOSNIER:

And you'd had your military experience.

KENNETH IVERSON:

Yep.

JOSEPH MOSNIER:

But certainly in your family vacations on the Montana prairie you wouldn't have had—?

KENNETH IVERSON:

You wouldn't see many [African Americans], No.

JOSEPH MOSNIER:

Maybe it was a non-issue, but it seems quite an extraordinary thing, from my perspective today, that you were willing to grapple with and engage that issue the way you did so early on. I would've thought that someone in your managerial position would've been worried about the ramifications for the company?

KENNETH IVERSON:

I'm sure there were people in managerial positions that may have been, but as far as I'm concerned, it was just a ridiculous issue to have separate restrooms for black and white. We just eliminated [them]. I'm sure there were people who didn't like what I did. There never had any problem with it.

JOSEPH MOSNIER:

So in ensuing years when you would locate plants in rural areas of the South, it wasn't really much of an issue?

KENNETH IVERSON:

No.

JOSEPH MOSNIER:

That's very interesting.

KENNETH IVERSON:

We always felt the rural areas were great untapped labor resources.

JOSEPH MOSNIER:

Interesting.

KENNETH IVERSON:

Well, I'll tell you a story that you'll want to hear about. My son at that time was in the fifth grade—.

JOSEPH MOSNIER:

You mean when you moved to Florence?

KENNETH IVERSON:

This was when we moved to Florence. My daughter—. The schools weren't good enough, so I decided I ought to send her to Ashley Hall in Charleston. She went there. He went to the fifth grade, and he came home shortly after he started and he said—. I was on my way to the plant and getting ready and he said, "Dad, I don't want to go to school." I said, "Mark, why don't you want to go to school?" He said, "Well, the kids have all hooks that they hang coats on and their jackets with their names on them. I don't have a hook with my name on it.'" He said,

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"I'm not sure I can find the seat that's assigned to me." Then he started to cry and he said, "Dad, I can't understand what the teacher is saying." The teacher was a Mrs. Singleterry from Charleston, South Carolina who had a heavy Charleston brogue. A few weeks later — this is how quickly children adapt — he came home and said, "Do you know what a perd and a sittence is?" I said, "No." He said, "A perd is what you put at de end of da sittence." Then he came home another time and he said, "Did you know the Great Lakes were filled with salt water?" I said, "Mark, we lived in Michigan. You know the Great Lakes are fresh water." He said, "Well, I'll tell you. There's a fifth grade class in South Carolina that's growing up that's been taught that the Great Lakes are salt water." I said, "Well, why don't you speak up?" He said, "You don't tell Mrs. Singleterry anything." So those were interesting experiences.

JOSEPH MOSNIER:

Sure, sure.

KENNETH IVERSON:

But there's a sequel, too. A year later in the sixth grade, he came home after he started [school] and he said, "Do you know the fellow from Illinois who has moved here and bought the Ford Dealership?" I said, "Yes." He said, "Well he's got a son in my class and gosh does he talk peculiarly."

JOSEPH MOSNIER:

Tell me about early key challenges in finding your way as President — after '65 — of Vulcraft and building a business. What were the principal challenges in finding markets and managing the production site?

KENNETH IVERSON:

Well, we had a serious problem. I took over the joist plant as a Vice President, then became a Group Vice President and moved to Phoenix, Arizona. The company had some six divisions, most of which were not doing well. It had about twenty million in sales and was losing about 400,000 a year. Well, finally the President resigned, and I think I got the job by default. I happened to have the only divisions that were making money, so I became President.

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This was 1965. We had to clean out the company. We got half rid of half of the divisions. We decided there wasn't any reason to stay in Phoenix, and it would be better to move closer to a larger operating division. I'm kind of opposed to a corporate headquarters being right at a division because that's kind of like living with your mother-in-law. But we picked Charlotte. Charlotte didn't pick us. We moved in 1966. We moved from Phoenix, Arizona to Charlotte and have the corporate headquarters have been here ever since.

JOSEPH MOSNIER:

Why Charlotte?

KENNETH IVERSON:

Charlotte had good transportation and remember we had a division in Nebraska, and we had at that time a division in New Jersey, and it offered good transportation. It was located nearer to our larger division, which was the joist plant in Florence, and we were thinking about building a steel mill in Darlington. It was related and had what we felt the company needed.

JOSEPH MOSNIER:

You mentioned transportation as one aspect of Charlotte's attractiveness. At that point in the evolution of the growing business, would there have been other infrastructure or business community aspects about Charlotte that were attractive? Did you need say a range of banking or other financial services?

KENNETH IVERSON:

No. You could've found those anywhere. That wasn't the main reason for moving here.

JOSEPH MOSNIER:

Proximity seemed to be good transportation.

KENNETH IVERSON:

Transportation was an important factor because of course our divisions in South Carolina and Nebraska and New Jersey. We looked at Chicago. We looked at New York City. We looked at Atlanta and we looked at Charlotte.

JOSEPH MOSNIER:

Charlotte would be back then distinctly the smallest and most—.

KENNETH IVERSON:

Yeah. That's right.

JOSEPH MOSNIER:

It was a selling point?

KENNETH IVERSON:

It was easy to get to the airport. It was a good place to have a business headquarters.

JOSEPH MOSNIER:

Settling into Charlotte in those years, did you try to find your way into groups like the Chamber or other networks of business leaders?

KENNETH IVERSON:

No.

JOSEPH MOSNIER:

That wasn't part of—?

KENNETH IVERSON:

That wasn't. We were building a company that had a lot of problems and a lot of opportunities at the same time. At one point the total equity of the company, I think, was $700,000. It was almost bankrupt. Our problem was solving those problems and building the company. We had less than a dozen people here. We started out with Sam Siegel and myself. That was the whole office. We weren't really a company that was dependent on the retail interests of the community or the financial interests of the community. I had been members of the Chamber of Commerce and [the] Rotary and Elks, but because of the traveling, I just wasn't able to sustain those and I felt that they weren't that critical.

JOSEPH MOSNIER:

In those early years when you were squaring up a difficult business situation and moving forward—. This is sort of broad, reflective question. I don't know if there will be things that spring to mind or not, but I'm wondering what sources of information were the ones upon which you tended to draw? What kinds of things influenced your thinking in a broad and general sense? What sources of information tended to impinge on your attention? Was it mostly the within the trade—?

KENNETH IVERSON:

A lot of it was trade. We were in the steel joist business, so the construction business was an important part of Nucor and has been and continues to be. We were interested

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in new ways we could expand into other steel products. We were a member of the—. Martha, would you like to come in here a minute?

MARTHA IVERSON:

Just a second.

JOSEPH MOSNIER:

Should I turn this off for a second?

KENNETH IVERSON:

Sure.

KENNETH IVERSON:

My move to Charlotte, I think, was the fifteenth move I'd had since I left Purdue. I used to have a saying that my Martha had the instinct, the ability, of nesting but the ability to move the nest around. She said, "The problem was he couldn't hold a job." Are you married?

JOSEPH MOSNIER:

I'm not married.

KENNETH IVERSON:

Oh, okay.

JOSEPH MOSNIER:

Let's see. You made me laugh, and I've lost my—. Two questions about general philosophical outlook that are relevant to your company's history. The first [question is about] your choice not to — down the road when the company becomes much bigger and foreign trade issues become very prominent, for example — have the company engaged in trying to influence the political arena directly. Can you talk a little bit about why that is?

KENNETH IVERSON:

That's right. We never had a representative in Washington. We felt that our business was the steel business, and we should really pay attention to that. We also were free traders. We felt there were sometimes steel companies outside the United States that could compete with us, but that we because of our processes and our employees, we were able to compete with any steel company in the world. We felt that we should not be denied access to their markets, nor should they be denied access to ours. I feel that same way today except for perhaps a little bit moderated in light of the low cost imports that were flooding this country during last year in the steel industry. I'm not quite as positive about that as I used to be.

JOSEPH MOSNIER:

The point that qualifies your thinking is perhaps that we may be seeing dumping as opposed to just competitive trade?

KENNETH IVERSON:

Yes. I felt it was unjust rather than just competitive trade. Although dumping itself is rather difficult to define because we have steel companies here that dump on the other side of the state and other parts of the country. I don't know if dumping is that good of a word if you define it as just selling less than cost.

JOSEPH MOSNIER:

Right. Were there ever times when a certain issue — in front of the Congress or otherwise — along the way made you stop and think you should relax that rule and send a lobbyist up to Washington?

KENNETH IVERSON:

Yeah. There were times. I testified before Congress at one time and the Senate, but it was against trade restrictions rather than for them. But there were times that I've had some double thoughts about it, particularly in recent years.

JOSEPH MOSNIER:

Let me ask you about this, as well. As Nucor prospered and became identified as a highly successful company and one that had really charted a new path for American steel, I would presume that your blessing would've been a very important political asset for persons either in the political arena or hoping to get in the political arena. This is a question that I put to a lot of business leaders — the extent to which their endorsement is sought out by political figures. The question [is about] the way politicians have come to you over the years. I'd be interested in having you reflect on that.

KENNETH IVERSON:

We had a very firm policy in the company. The corporate company did not contribute to any politician. It was just not a part of the company. If individuals wanted to, that was fine, but there was no corporate approval or donation to anybody. That was because we were widespread and there were politicians in different parts of the country that were interested

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in our supporting them. We felt it was not fair because we had so many people in different parts of the country that the company should just stay out of that arena.

JOSEPH MOSNIER:

So effectively then — because you could never fully never remove the corporate hat, the Nucor hat — you yourself personally kept a low profile on those issues as well?

KENNETH IVERSON:

Yes I did.

JOSEPH MOSNIER:

How about your reflection generally? You're setting up and really building a business from the mid-sixties forward. What was your perspective on the typical southern state house and legislature in those years and the nature of the politics that unfolded in those places, insofar as it had implications for you and the business? I ask in part because your early experiences were in a different part of the country. Coming in and observing how southern politics is operating, what kind of impressions did it make on you?

KENNETH IVERSON:

I don't know. Southern politics — when I first came here in 1962 — was unusual for me. I was not used to politics being run that way. But I felt comfortable with it. I found it very interesting really. I remember meeting Fritz Hollins when he was leaving as Governor. I always enjoyed it although I was never a strong participant because our business was not focussed on something that was political. We only got involved in it when we began to build plants all over the United States, and we wanted to get tax concessions in order to make it more reasonable for doing that. Then we got more involved in that area of government.

JOSEPH MOSNIER:

I wanted to draw you out on that point. Was there any contradiction between your professed corporate value on the one hand — that you disfavored corporate subsidies in any form — and then the whole tax concession issue? It has become such an important one for plant sitings, obviously, so your reflections would be—.

KENNETH IVERSON:

That was interesting, and probably there is a little bit of conflict between our principles and what it was necessary to do at that time. As companies more and more required that they [received] tax concessions, our own people got involved in that. The cost of an infrastructure and roads and things of that nature for a new facility became important to the company. That's very true.

JOSEPH MOSNIER:

Within the industry, it became a competitive necessity in your view?

KENNETH IVERSON:

Yeah. It became necessary. If you were going to go into an area, you needed to have some concession on taxes for the first few years. It's kind of interesting. One of those principles—. When we were proposing [to build] a mill in Blytheville, Arkansas, Bill Clinton flew over to Charlotte and sat down. We said we needed—. There were five items. I went through them one, two, three, four, five. It included a tax concession, and it included some infrastructure. It included some other things. He agreed to all of them except one, which was a tax relief for companies that were in Arkansas.

JOSEPH MOSNIER:

I have to ask. It's a bit of an aside, but I'm curious. What was your measure of the young Bill Clinton — young Governor Clinton — in those years?

KENNETH IVERSON:

I was very impressed with him when he came over with one security guy and a private plane and came to our offices, which were over on Randolph Road here. We sat down, and in about an hour it was pretty well resolved. He had to get certain legislators, legislative things through. He said, "I can do that." And that was it. It took a little longer, the second plant we built there. It took a little bit longer. I went over there and said, "We're coming here." I remember one story about him. He said that — when I was there — he said, "You know you're lucky. As the Chairman of a corporation, you can get things done rapidly. You don't get anything done rapidly in government."

JOSEPH MOSNIER:

Let me take you back for a moment to the issue of plant sitings and the negotiating for certain tax concessions. How big a factor were the tax concessions in your decision to locate in Trinidad?

KENNETH IVERSON:

The tax concessions were not a reason to locate in Trinidad.

JOSEPH MOSNIER:

Not at all? It was the ore supply?

KENNETH IVERSON:

It was the fact that that was a good location for bringing in ore from Brazil to Trinidad and then using that ore for the iron carbide and moving it there. You eliminated moving lots of ore. The tax concessions really didn't have anything to do with that.

JOSEPH MOSNIER:

Another issue [is about] — stepping back to again a broad philosophical question — the role of unionization in American labor and capitalist enterprise. You obviously had a certain model of operating the business that made it not so difficult for you to encourage workers to the view that unions weren't necessarily something that they needed to see their interests well represented.

KENNETH IVERSON:

That's right.

JOSEPH MOSNIER:

Maybe if you would, reflect broadly on that question of unionization. Do you see it as useful in some places?

KENNETH IVERSON:

There are companies that need unions where management is really not very good and where there ends up policies that are unfair to the workers and so on. I think sometimes they need a union. But I don't think we have—. We treat our people fairly. We've always had a profit sharing program for them. We're very loyal to our people. We don't lay off anybody. We haven't laid off anybody. We haven't had a layoff, across the board, ever in the company. So we don't lay people off. We reward them for—. The whole idea is you get rewarded for what progress the company makes and what your proportion is of that progress.

JOSEPH MOSNIER:

We had talked earlier about how you grabbed hold very quickly of the whole issue of Jim Crow style racial division within a plant and took care of that and it didn't prove to be much of a problem. Was the integration of women into Nucor Mills over the years—. It must be an interesting story.

KENNETH IVERSON:

That's a good question. We have hired lots of women over the years, but remember steel is not a climate that is necessarily conducive to the female. We ran an ad one time for women in the steel mill.

JOSEPH MOSNIER:

I've seen that.

KENNETH IVERSON:

They're wonderful workers. I'll tell you were they were the very best in maintenance or in crane operations. They had a dexterity, of course, that is probably a little bit better than men. We have lots of women who operate cranes in the company. They've done very well. We've had a number of women in the financial area, of course, too. We even had some that have operated furnaces, although that's rare. We were always interested in hiring regardless of the sex [of the applicant]. That didn't make any difference. It was just difficult. We had two women that I remember had applied as truck drivers one time. They took them out and got in a truck and said, "Drive it around." They couldn't do it. We had a women who we hired one time and we said, "Now, when you got out as an inventory control [worker], you've got to wear slacks. You can't go out and climb over all that in a dress." She said, "Well my religion won't let me wear pants." She had to quit right a way. Instances like that kind of made it less easy to employ a lot of women.

JOSEPH MOSNIER:

How about in terms of the shop floor culture? Was the arrival of women onto the shop floor in the mills a substantial management problem for your plant managers [and] general managers?

KENNETH IVERSON:

No. I don't ever remember that. We've had women who are in maintenance, and we've had women who worked out in the shop. It's never been a problem. I imagine there are instances where there have been some disappointed women or disappointed men, but we've never had that as a problem.

JOSEPH MOSNIER:

In your book you talk about your willingness to take risks. You use the phrase "prudent risk." [You say] that — as a natural and normal part of your operating philosophy as a businessperson — every once in a while something will go wrong. That's just part of the range of—.

KENNETH IVERSON:

I have a saying that about fifty percent of the things we try really don't work out, but you can't move ahead and develop new technology and develop a business unless you're willing to take risks and adopt new technologies as they occur.

JOSEPH MOSNIER:

In coming to a judgment that a given gamble is a prudent one, how much of your calculation was expressly experientially derived?

KENNETH IVERSON:

That's one of the things that I really provided to the company. I had experience in metals and metal processing. Fortunately we got the reputation of accepting new ideas in an industry that was rather tradition bound. That gave us a distinct advantage in developing the culture and developing new processes and new technologies that made Nucor successful.

JOSEPH MOSNIER:

When did the day arrive — and maybe it was because journalists just kept showing up at your door to ask you to explain why things were going so well — when you had to put a name on the management philosophy?

[TAPE 1, SIDE B]

JOSEPH MOSNIER:

This is side B of the first cassette of [an interview with] Mr. Iverson on the 11th of June, 1999. Let me just pose that last question again. I was asking if the day arrived when you had to stop and say, "Oh my goodness, I do have a coherent management philosophy, and I'll put a name or a label on it."

KENNETH IVERSON:

I don't know if I ever put a name or a label on it, particularly. We became more recognized as the company became successful — as it was recognized as an innovator in the steel industry.

JOSEPH MOSNIER:

Over time, how did you manage Nucor's reputation [and] image as against, say, big steel?

KENNETH IVERSON:

[Laughter] I don't know exactly. I never had a lot of respect for the big integrated steel industries. They were inflexible. They were bureaucratic. They all had unions. They certainly weren't a cultural pack that I wanted Nucor to follow. Our philosophy really developed from the general managers. Each steel mill has a general manager. He reports directly to the corporate headquarters. He basically has a responsibility of running the business. Now of course there are some caveats with regard to treatment of people and with regard to participation in the insurance and the profit sharing, which are corporate wide. But basically he runs it, and he is the number one human relations person in that plant.

JOSEPH MOSNIER:

Let me draw out a little bit more about big steel. It's hard to point to any one part of the puzzle that fits together as big steel. You've mentioned the nature of the plant, the nature of the management, the bureaucracy that prevails, the unionized labor force, the particular history and product stream, and so forth. Could US big steel's history have turned out substantially

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different than it has if they had taken one particular step at one particular point along the way or were there any key turning points that things might have gone differently in your judgment?

KENNETH IVERSON:

Remember after World War Two we were the largest steel industry in the world. We were not just larger than one or two or three. We were the largest of all of them put together. Our steel industry became very complacent. They had had great success during World War Two. They were not acceptable to new ideas. They really were used to having unions and the unions were a very powerful force in the steel industry. They were reluctant to adopt any new ideas. Eventually the steel companies and the mini-mills were growing up in Italy and mini-mills in Europe and new technologies were rolling and casting. Those things were occurring. There were sixteen continuous casters outside the United States before there was one in the United States. That one was put in by a small mill in Roanoke, Virginia. We were just behind the rest of the world. It began to show up, particularly in the fifties, initially when there was a big strike and we began importing a lot of steel from outside the United States. We did a lot of importing of steel at that time. We didn't have steel mills. We did a lot of importing of steel, even I remember from Russia at that time. There were just all sorts of opportunities for new companies to develop to accept new ideas in the steel industries. We were just fortunate enough that we were able to take advantage of that. We built the first mini-mill in 1966. Seems to me it was 1966, 1967. In 1970 it really got going. We felt we could compete with steel companies inside the United States by using these new technologies. Then we kept on building steel mills and joist plants.

JOSEPH MOSNIER:

Over the years you were careful to attend to relationships with certain European equipment manufacturers whose technologies would become very, very critical in your operations. How—?

KENNETH IVERSON:

We originally had US equipment, but we also found that we could get more technically advanced equipment by going outside of the United States. We developed the first mill. We developed a relation with Morgenschamar in Sweden and with, at that time, it was ASEA Electric—A-S-E-A, which later became part of Brown Boveri. I remember one time myself, the construction manager, and potential manager spent about two weeks in Europe doing nothing but touring these small steel mills that were starting up over there. That really was a great trip. It gave us a good idea of how outdated the technology was in the United States.

JOSEPH MOSNIER:

When abouts was this trip? Do you remember?

KENNETH IVERSON:

Let me think. 1967 I think.

JOSEPH MOSNIER:

Okay. Let me ask a very mundane question. How does the executive management of a small [and] then relatively small American steel producer put an itinerary of these visits together with people in Europe?

KENNETH IVERSON:

We just looked up the names of the people we knew who were strong in the steel industry and had mills that we wanted to visit. We went to Danielli in Italy and Morgenschamar and a number of German companies, a mill in Denmark. It wasn't too hard to find the names of them. You just asked if you could come and visit them, and most of them were very receptive.

JOSEPH MOSNIER:

Why were they receptive, I wonder? Why did they want to help you out in your thinking and your deliberating and your exploration?

KENNETH IVERSON:

A number of them were equipment suppliers.

JOSEPH MOSNIER:

Oh well that sure.

KENNETH IVERSON:

Like Danielli and Morgenschamar. Normally it was the suppliers who helped us to get into them.

JOSEPH MOSNIER:

Here is our equipment installed.

KENNETH IVERSON:

Yeah. See our equipment installed. That was certainly true of—. We visited four or five small mills in what was called the Breschiani part of Italy, northern Italy where most of those and Danielli equipment [were]. And of course Concast was interested in selling continuous castors, and the United States was not very interested. That gave us a lot of entrees, too.

JOSEPH MOSNIER:

Did the joint venture with the Japanese—?

KENNETH IVERSON:

Yes.

JOSEPH MOSNIER:

Tell me about the origins of that.

KENNETH IVERSON:

That's interesting. We were approached by Wachovia Bank, which was our principal bank. They said there is a a Japanese bank which would like to talk to you about a Japanese company who is interested in doing wide flanged beams. At that time there was a lot of political conflict about Japanese shipping steel into the United States. They introduced us to the Industrial Bank of Japan, IBJ. They said, "We have someone who would like to talk to you about a joint venture, too." It was not proprietary, but they had for four or five years worked on continuous casting I-beams, close to the shape of the I-beam, which eliminated a lot of rolling. Instead of taking a square, you cast what was roughly an I-beam shape, and then you rolled it down in fewer and fewer passes. It originated, I think, in Algoma in the United States, but nobody in the United States had taken advantage of it. The Japanese had. They came over and we sat down and discussed it. It took us a year. You don't make fast contracts with the Japanese. It took us a year to do it. I was in Japan two or three times and they came here and met here two or three times. It finally was decided we would have fifty-one percent. They would have forty-nine percent. We would build it as a joint venture. We picked the location in Arkansas. When they saw it, and they found out we were going to pay $2000 for the land — per acre — they nearly

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fell flat on their face. They couldn't believe. They kept saying over and over, "Are you sure this is only $2400 an acre?" I said, "Yeah." So that's the way we started out. Now, they were wonderful assistance to us. They knew the technology very well. We took these big Arkansas farm boys and sent them over to Japan to train on running this castor for about five weeks or something like that. They did a marvelous job. After three weeks, they were running the castor themselves. We had a bunch of Japanese here when we were building the plant. I remember that they used to get very upset — the Japanese being very meticulous — that we'd hammer out a foundation or something. They'd say, "Ah, we hammered out foundation." And John would say, "That's just the foundation for today. We'll probably hammer out another one tomorrow." Our method was to build it as fast as possible because once your money is tied up in capital construction, you want nothing better than to do it and don't spend a lot of time bureaucracy or planning. Go ahead and build the damned thing. So we did. They wanted to make whole runs with just bars. We said, "No. We're going to start it up and melt and make the cast and run it right through." That's what we did. That was a wonderful experience. They were really great to work with. We still have a wonderful relationship with them.

JOSEPH MOSNIER:

Any aspect of this joint venture that could be construed as part of a wider Japanese government sponsored initiative to move certain parts of Japanese manufacturing onto the mainland US, as they've done with auto joint ventures and so forth?

KENNETH IVERSON:

I think there probably was some interest in the Japanese government because there were a lot of joint ventures with steel companies during that time. This was a small Japanese company. They were really much smaller than we were in some respects. But they were interested in doing it so that they would have a US source. They were being pushed out of the

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West Coast where they had been shipping imports in for a long time. They wanted to protect themselves in that regard. That's the way it developed with us.

JOSEPH MOSNIER:

You didn't have a sense along the way that there was an expressed measure of pressure — not pressure, but encouragement — from the Japanese government to get a deal like this done and to help manage the politics of the balance of trade and so forth?

KENNETH IVERSON:

No. No. We, like most Japanese, made a contract. We sat down and one of the things we wanted was fifty-one percent. We wanted an understanding that the managers would report to Americans as the managers, although you would have department heads who were Japanese. We also wanted to reduce the total leverage in the operations. We made the contracts and we said that it was unsatisfactory to us. We went over to Japan after they admitted we'd make a lot of changes and here they had the exact same contract all over again. That's typical of the Japanese. However, they were right, and we were interested in even going further and doing some multiple rolling, have to go through two stands and then back. There was a mill that was built in Russia, it seems to me, that had used that technology and our people thought it was interesting. They said, "No. That is not a good technology." We finally — after really studying it and almost coming apart because of that — agreed they were right. We did not adopt that technology, which was way out and eventually was not very successful. We learned a lot from them.

JOSEPH MOSNIER:

Have you considered other joint venture initiatives along the way that you had found cause to reject or decline? Any substantial ones?

KENNETH IVERSON:

We were involved in a possible joint venture in Thailand that — just because of the people involved in it — we eventually backed out of. We were interested in building a joint venture with a Brazilian company in northern Brazil, where there is no steel mill. We finally got

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so that that didn't appear like a good deal, and we backed out of that. We've been involved in lots of opportunities or Nucor has to build steel mills in Iran or Egypt or wherever, but most of those people want to build a steel mill that is everything to everybody. They want to make rebars and angles and channels and flat rolled products and the whole thing at a mill. That's just not the way that Nucor has operated. Eventually those broke down.

JOSEPH MOSNIER:

The northern Brazil one, you didn't pursue it because your sense of the market there shifted or because the financial particulars were not advantageous?

KENNETH IVERSON:

Why did they break down?

JOSEPH MOSNIER:

No, the northern Brazil case in particular, you lost your confidence that moving into that part of the Brazilian market would've been—?

KENNETH IVERSON:

We didn't. They suddenly decided that they wanted to do it all — build a big complex — and we weren't ready for that. We wanted to build a rolling operation and take slabs from Brazil or from the United States and roll the slabs and cold finish them. They wanted to build the hot mill and everything at once. We felt that that was just not a good idea.

JOSEPH MOSNIER:

The principal task that you've set your managers is to — as you've observed in various places and in your book — shape an environment that encourages a certain kind of opportunity for employees to realize their potential and contribute in an unencumbered way to the company's success by aligning their interests with management's and the company's generally. I want to ask a few questions about picking people along the way.

KENNETH IVERSON:

Oh, that's critical.

JOSEPH MOSNIER:

Do you have a theory? Do you have a rule of thumb? You fly by the seat of your pants? I know you have employed a professional to help you with the design of certain

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psychological tests that you give to managers. I wonder what sorts of things you think are interesting to find out.

KENNETH IVERSON:

We have used a psychological test for managers not particularly to find out how good the manager is. We know before that he is technically proficient, knowledgeable and so on. What we're trying to find out is what are the weaknesses where we need to shore him up as a general manager, if he's the one that's selected. We had a basic process that we went through. Normally most of the managers came from inside the corporation. They had come up and been recognized and were foreman and even department heads at one point. When we came to select a general manager for a new plant, he first of all had to be recommended by the manager of that plant, which he was in now. Secondly, he had to go and be tested psychologically in Chicago. He had to be interviewed by myself, by John Correnti, and by our manager of personnel sevices. If any five said, "No. I don't think he's the person," we didn't pick him. Now I've had good and bad. I've had, the four people and I've picked for manager and the one I picked for manager or Sadler and Associates, which was in Chicago and did the psychological testing said, "Don't take him. He won't be a good manager." We did not. Subsequently that turned out to be the right opinion from what history showed. But he's also been wishy-washy on what we could or could not do it. Sometimes we picked them and were disappointed.

JOSEPH MOSNIER:

What impressed you the most and at the same time, what caused you most concern in evaluating a perspective manager?

KENNETH IVERSON:

I guess I was looking for someone who was really interested in people and in managing people and who could get along with people. That's the criterion that is the most important. You can always find someone who has the technical abilities or appears to — we

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made mistakes in that area — but to find somebody who can really get along and be a leader of people is a difficult. It is not an easy job.

JOSEPH MOSNIER:

Just to pursue the point of these psychological tests, profiling tests that you did and so forth, what were you most interested to find out? Did you get involved in the evaluation of these tests and the design of these tests?

KENNETH IVERSON:

No. That we left to Sadler and Associates. He designed a test for us to select foremen, and it was a simple test. What he did was take a bunch of good foremen and a bunch of not very good foremen and found out differences to various questions and he used that as a guide to selecting foremen, which worked out pretty well surprising. Strange questions [such as,] "Do you like to watch baseball games?" "How much sleep do you get at night?" Psychological questions that look peculiar to you and I, but actually from which he could get really good insight.

JOSEPH MOSNIER:

Your efforts to make sure you had just the sort of managers you wanted, obviously that effort has paid great dividends. You rightly gave a lot of attention to it. Just one last question on this front. How much time and money did you spend on the Sadler people as a measure of your necessity of committing in a certain way to this evaluative process?

KENNETH IVERSON:

They were one of the basic components of our selecting a general manager.

JOSEPH MOSNIER:

So you routinized it and made it a part of the—?

KENNETH IVERSON:

It was a course that we followed and a pattern that we followed in selecting.

JOSEPH MOSNIER:

No undue expense or attention that you had to pay to Sadler and Associates over the years?

KENNETH IVERSON:

No. No. The general managers met three times a year. They outlined a budget and made proposals for the next year as far as capital expenditures in a meeting in November. In a

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meeting in February, we finalized that. Then we had a meeting in May that was mostly devoted just to employee practices and policies. This was very much a participative meeting. There was a lot of argument, a lot of discussion about it. They were very much all involved in that selection.

JOSEPH MOSNIER:

Let me ask about your effort, as you put in your book, "to escape the box," the one-third of the steel market that you could participate in before you went into the flat roll business. This might sound an odd angle of approach, but much of this has been covered in the book and in the business press. I hope this sounds like a serious question. I intend it is one. What sort of emotional experience was to take that gamble across those couple of years? What sort of levels of anxiety? How much concern?

KENNETH IVERSON:

You mean going into the flat roll business?

JOSEPH MOSNIER:

And investing. Plunking the money down to take that gamble.

KENNETH IVERSON:

For me it wasn't any risk. I've often joked that I slept like a baby. I'd wake up every hour and cry. Basically it was a just a thrilling experience. Every company at some point plays "bet the company." They take a risk when they don't have the financial strength to really take that risk. This was not the case. This was something that we knew we had to do eventually. If we were going to be a steel company, we had to get into the flat roll products, and we encouraged SMS and supported their developments from 1984 until they thought it was ready to be commercialized in 1989. For me, it was a wonderful experience and just what we were looking for. I had no really big trepidations although the other steel companies did, and certainly Bethlehem had a two paged book, which they showed wouldn't work. But it was—. It did work, and I always had confidence it would. That's not true of lots of things that we've done where I didn't have that kind of confidence.

JOSEPH MOSNIER:

But your general level of comfort there was pretty high, that this would work, pan out.

KENNETH IVERSON:

My comfort level was what we needed to do it. It was a huge opportunity and the risk was well worth the rewards.

JOSEPH MOSNIER:

I'm going to reach back to a question I asked some time ago. You just mentioned SMS and watching and maintaining a relationship with them over many years before they told you the technology was really ready to go. How did you maintain that relationship? What was the nature of those contacts over the years?

KENNETH IVERSON:

I went over there. Our engineers went over there. We had people visiting them two or three times a year.

JOSEPH MOSNIER:

So it's just something you wanted to keep a close eye on?

KENNETH IVERSON:

Yeah. It was something we were very interested in.

JOSEPH MOSNIER:

The decision to open the Trinidad plant to—.

KENNETH IVERSON:

Iron carbide.

JOSEPH MOSNIER:

Produce iron carbide, exactly, from the Brazilian ore. I think you write in your book or were quoted somewhere as calling that—. I think a journalist called you up and asked you about that. You were quoted as calling it "a giant lab experiment."

KENNETH IVERSON:

Yeah.

JOSEPH MOSNIER:

Did that plant have a fallback use or was that a pure eighty million-dollar gamble?

KENNETH IVERSON:

It was a gamble. It didn't turn out the way that exactly we thought it would. There were more technical problems associated with it than we suspected or had been led to believe were solved, and the problems were not solved. Finally the company decided to abandon it not because we weren't—. We were at the point where I think we could have made it work. We had

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worked with Lurgie and other people and were sure that the original process had to be substantially revised in order to make it work. But at that time the price of scrap went so low that it just was no longer economically feasible. The company decided not to pursue it.

JOSEPH MOSNIER:

How about that underlying dream there that you talked about at one point — the one-step iron carbide, no tube steel production?

KENNETH IVERSON:

I'm not sure I understand that.

JOSEPH MOSNIER:

I think in your book you talk about—.

KENNETH IVERSON:

I know what you're talking about. The once using iron carbide as the whole process and just using iron carbide. That certainly will come about some day. It's still technically feasible, but we'd never developed iron carbide to the point that we could provide the quantity and quality of iron carbide to make that a possibility.

JOSEPH MOSNIER:

Let me shift to another issue. The general matter of scrap supply and market. Can you sketch the rough trajectory of that market and the ebbs and flow and the reasons therefore?

KENNETH IVERSON:

What market is this?

JOSEPH MOSNIER:

The scrap metal market and your supply stream, in other words, on that front. What issues have been most difficult to manage in that regime?

KENNETH IVERSON:

We work with the David Joseph Company. They are the primary scrap supplier to all of our mills. We buy all of the grades of scrap that are available in smaller or larger quantities. Our philosophy is not to build up a big inventory of scrap and risk what will happen in the market, but when scrap prices are down to buy about twenty percent more than you use every month. When scrap prices are very high, you reduce that and just buy what you need basically to maintain an inventory. We have a policy that we should maintain an inventory of at least eight weeks scrap on the ground. That's very simple. The scrap deal is going to fly over and

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take a photograph of your inventory, so you'd sure better have enough so he's not suddenly going to raise his prices. That's the basic business.

JOSEPH MOSNIER:

Does the scrap supply stream at all involve issues related to environmental policy, government regulation? I don't know that matter at all in any detail.

KENNETH IVERSON:

Yeah. Environmentalists become a more and more important part of a scrap business. One of the really, really serious problems of buying scrap has been radiation detectors because you take somebody who has a dental x-ray, and it's got some cesium in it. He just throws it into a scrap pile, and eventually you melt it, and you've contaminated everything with it. We've had that happen a number of times. Now we use the best and the highest priced scrap radiation detectors that we can in all of our operations.

JOSEPH MOSNIER:

Any other issues about plant operation where environmental concerns have been a central challenge?

KENNETH IVERSON:

Environmental has become a major issue. You're always going to have people who are protesting that you are going to influence the path of the birds flying over the plant or something of that nature. Of course, particles that come out of the smoke control, bag houses is now a very important and expensive part of building a plant. It used to be that maybe in a plant you'd spend five percent of your cost in environmental controls. Today it's probably closer to fifteen or twenty percent.

JOSEPH MOSNIER:

We talked a little bit about the SMS relationship over time, but how have you managed, within the company, to keep apace of other aspects of technology that have been relevant to the business? Has that been a big problem or concern?

KENNETH IVERSON:

No, it hasn't. We have a reputation in the steel industry — Nucor does — of accepting new technology. When people developed new technology they would come to us with these

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ideas, and then we could decide if they were good or bad or show them out and make them our mistake as well as their's.

JOSEPH MOSNIER:

But generally people are knocking on your door to say, "Hey look at this?"

KENNETH IVERSON:

Yeah. "Look at this."

JOSEPH MOSNIER:

Let me turn for final few minutes towards the question of broader economic context in the last thirty or forty years. I don't imagine that given the nature of your business and where you're plants have been located and so forth that the particular unfolding economic history of North Carolina ever had to be a close professional concern.

KENNETH IVERSON:

No.

JOSEPH MOSNIER:

Was it at all something that mattered in your calculations? Maybe not. You have no plants in North Carolina.

KENNETH IVERSON:

We do.

JOSEPH MOSNIER:

Oh, excuse me.

KENNETH IVERSON:

We have a plant that produces bearings in Wilson, North Carolina.

JOSEPH MOSNIER:

Oh, the bearings plant.

KENNETH IVERSON:

We're now building a mill in Hertford County, which will be a big mill to produce plate.

JOSEPH MOSNIER:

Okay.

KENNETH IVERSON:

I guess the answer to that is yes. We were never really principally involved as a North Carolina corporation.

JOSEPH MOSNIER:

It's a regional issue, anyway. Let me take up the matter of the broad economic transformation of the South across the last forty or fifty years — the post-War South. What factors do you think have been most—. This is an open-ended question with no firm answer, I suppose. What factors are most responsible for the success of a company like Nucor — a new style of industrial success in the South in the Post-War.

KENNETH IVERSON:

The South has really completely changed since I first came here in 1962. A lot of it is due technologies moving into the area and to educational policies that allowed for a more educated workforce and by the companies themselves producing a more educated workforce. That's made tremendous changes in the South. When I came in 1962, there were almost no metal companies here or metal fabrication companies. That has been one of the major areas [of southern development]. I think it's been helped by the fact that it also has a more non-union climate, than a particularly militant union climate. The financial resources here have greatly changed too over that period of time.

JOSEPH MOSNIER:

Did you ever consider Nucor a southern corporation? In other words, [did you consider] the issue of persistent regional distinctiveness or no?

KENNETH IVERSON:

No. I don't think we ever thought of Nucor as really [having] a southern heritage or [as a] southern corporation. We have plants all over and there's some interesting stories in that regard. When we built our first plant outside of South Carolina in Nebraska, we took a number of employees from the plant in Florence and moved them to start this new joist plant in Norfolk, Nebraska. They spent one winter in Nebraska, and we probably had twenty percent of them that loaded up in their cars and came back and said, "Can I have my job back?" The regional differences were much greater in 1962 than they are today. Employees today are more ready to move for an opportunity to almost any climate. I've often said that the South—. You have other-directed, inner-directed and traditional-directed people. When I came here in 1962, certainly it was more the traditional-directed individuals. That's gradually disappearing from the area. A good example of that is turning on your parking lights when you drive at night. That was still very prevalent here when I moved down in '62, and it's all gone now. I lived in Scottsdale, Arizona. There was a store —Nordstrom or one of the great department stores —I went one time, and they had at that time a telephone dialing service where you put in cards and then you pushed the button and it dialed it. I was talking to him and he said, "This is really simple to operate. All you do is put the card in and you mash the button." I said, "Where are you from in South Carolina?" I did it instinctively and he said, "My daddy and I had a lumber store In—." I've forgotten where it was, but—.

JOSEPH MOSNIER:

"Mash." Yeah.

KENNETH IVERSON:

That's really traditional-directed, and that's been a characteristic of the South, which is both good and bad. I mean, it's good. I'm sorry to see some of it disappear.

JOSEPH MOSNIER:

So less and less generally — both in the business world and just in the cultural climate of the south — you see that regional distinctiveness slipping away across these thirty plus years.

KENNETH IVERSON:

Yeah. When I came here, you didn't need big contracts. A handshake and an understanding was really—. A man was as good as his word. That I think is disappearing a lot from the South and is becoming, unfortunately, like the rest of the country.

JOSEPH MOSNIER:

You've mentioned in the course of our conversation that being actively involved in influencing the political regime and the environment was not something that Nucor spent its time doing, but as a citizen and as a business leader, how happy or not have you been with the state's fiscal priorities and the region's fiscal priorities? I'm thinking of infrastructure, education,—.

KENNETH IVERSON:

I think there's still a lot that needs to be done in the educational area in the South. I'm not just talking about North Carolina but in the South as a region. As far as fiscal responsibility, I think they have really done a pretty good job in not overspending and really keeping taxes in a reasonable area.

JOSEPH MOSNIER:

One last question. How about the issue of what you could call "corporate civic responsibility?" What's the proper role of a profit-making enterprise in a system like ours? How wide are your obligations?

KENNETH IVERSON:

I guess I may be a little bit old fashioned. I'm a great believer in charity begins at home. The most important thing is to take care of your employees and make sure they have a good place to work and a fair place to work and opportunities to advance. We were, I think, the first in the United States that we provide a scholarship. I guess it's up to $2,200 a year for four years of college for every child of every employee without restriction. That's been a hallmark of

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the company. We have lots of employees who have taken advantage of that and then come back and worked for the company.

JOSEPH MOSNIER:

Any other thoughts? Are there other issues you think are really important to add at this juncture?

KENNETH IVERSON:

No, I can't think of anything, really. We've covered it all pretty well.

JOSEPH MOSNIER:

I really want to thank you for sharing your thoughts with our series. Thank you.

KENNETH IVERSON:

Okay.