Flexibility is a virtue at Computer Associates because an essential part of the management's strategy is its dogged "reinvention" of the workforce. With his markets always shifting, Wang takes radical steps, such as routinely moving programmers to projects to which they bring little, if any, apparent knowledge.
For instance, Wang and Kumar reassigned John Kane, a programmer, to a crash project developing Unix-based software for midrange computers, even though Kane had earlier worked only with mainframes. And Kane had no prior experience with Unix, a computer language first made popular in scientific and technical circles. "It was a daunting task," Kane recalls with a wearied look. "It was less than a year from the time Computer Associates announced the concept to delivery of the product. Many of our vendors said it couldn't be done, to design a solution for a platform I had never worked on before."
But at Computer Associates, the management looks for character as much as for skill. "John knew nothing about Unix, but we knew he could take a problem, dissect it, find the solution -- and in the process learn Unix," says Kumar. He claims that most large software companies would have gone on a hiring binge and brought in a host of "Unix gurus off the street." Kumar adds that it's only later on that the companies learn they have created a system that robs those bright recruits of their creative edge. His label for that transformation: "Eagles in, turkeys out."
Nucor, like Computer Associates, looks for flexible minds to ensure a turkeyless workplace. The company does extensive psychological testing and routinely screens for possible drug use. Nucor insists on nonunion workforces and locates its plants in rural areas, where chairman Iverson believes a strong work ethic still prevails. Crawfordsville has no personnel department. Because the company knows what it's looking for -- "Teamwork, a positive attitude, aggressiveness, and a strong work ethic," says Larry Roos -- supervisors simply reach a consensus on potential hires. As Paul Rokosz, a supervisor in the cold mill, notes, "Ninety-nine percent of the people we hire have no steel-plant experience." But since 1988, adds Rokosz, the cold mill has lost just four employees, two for poor work performance and two for drug use.
Those whose psyches survive the hiring gantlet make good money and have a secure job. Nucor claims it has not had a layoff in 22 years. Short of a depression, it keeps its mills running, even at the risk of flooding the market. In return, workers must produce. Base pay for the typical production worker is about $10 an hour, but incentives can add another $15 on top of that. Such a bonus-laden pay scale pushes employees not just to work hard but also to maintain equipment to ensure it will not break down. The Crawfordsville plant, for instance, uses about .8 man-hours to produce a ton of steel -- about one-fifth what its larger competitors require.
At Nucor work is done in small, tightly knit groups guided by a supervisor. "Manufacturing work can be humdrum," says Roos, "but we give our people the chance to shape their own work." That, he reasons, takes the edge off the drudgery. Production workers are on four days, and then off four -- but each shift runs 12 hours. Seniority saves no one. All workers must alternate between working day and night shifts.
Out in the cold mill a coil of steel spins through a whining mass of machinery the size of a small two-story house. That is a reversing mill. Based loosely on the concept of the wringer on an old-fashioned washing machine, the mill rolls steel to reduce its thickness. The group running it numbers just four. Crew chief John Lewis works the computerized controls as Randy Penick, the utility person, and Al Woodall, the entry operator, watch the progress of the coil through the mill. Paul Cohee, the fourth member of the crew, operates the crane that guides the next coil into place for processing. The noise is deafening, and a greasy film hangs in the air as lubricating oil gets spun off the steel whirring through the mill. By shift's end the crew members' blue uniforms will have turned a coppery brown.
The reversing mill was deemed dated technology when Nucor bought it -- used -- thrown in for $5 million as an afterthought by the German supplier that installed the main casting line in the plant. The supplier rated the mill's output at 325,000 tons per year. Crews changed the way the coil was fed into the mill, upping the speed it could pass through from 960 feet per minute to 1,960 feet. They reduced the time it took to thread the coil on the rollers from five minutes to 20 seconds. They found a better grade of lubricating oil and installed a bigger motor on the payoff reel.
Those changes, coupled with hard work, resulted in the reversing mill's rolling 650,000 tons of steel last year -- twice as much as its manufacturer believed it could.
This year it should do 700,000 tons.
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Assets: Forever betting on the undervalued
Every good bootstrapper knows how to buy assets like that reversing mill for a dime or two on the dollar -- and then get more production out of them. Both Nucor and Computer Associates are aggressive acquirers of nominally different things. Computer Associates buys software companies and the talent therein. Nucor buys equipment. Ultimately, though, both companies are buying the same thing -- undervalued technology they believe the business can leverage.
Nucor's Crawfordsville plant is built around a single and substantial technological bet, the ability to achieve continuous casting of a thin slab of sheet steel. When Nucor built the plant, in 1988, at a cost of $250 million, the technology for the process had never been proved on a production scale. Metallurgists believed steel could not be continuously cast in a slab less than eight inches thick. In casting sheet steel, there is a big advantage in making it as thin as possible, since rolling steel to reduce its thickness is costly.
Nucor's bet paid off, with Crawfordsville being the first production-scale caster to produce a continuous slab just two inches thick. Competitors are now scrambling to follow Nucor's lead, but the company recently installed a second caster at Crawfordsville. The first caster gave Nucor its cost advantage by stripping out about $50 per ton in conversion cost. The second will give it leverage. It will cost $45 million and require adding 30 people to the workforce. But it will increase the plant's annual output from 1.1 million to 1.8 million tons.
