Do you think Kappmeyer should sign the proposal, and why? What pushed USS to stay with conventional technology? My recommendation based on analysis of the case and understanding the basic nature of disruptive technologies, and their impact on the general industry is that Kappmeyer should not sign the proposal. The main reason for that is USS is tying itself to an existing, but dying business model and technology. While this plan may make sense in the short-term, it does not have long-term sustainability. The market has already indicated that it is changing, adapting to minimills, and this trend would likely continue. As minimill technology becomes more sophisticated, their quality and other disadvantages would reduce and they would
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This number may be reduced if some of the workers could be relocated to an existing or a new Greenfield plant. Since USS is committed to invest in a continuous casting capacity at Mon Valley, this may be the only way to save $800MM investment, unless USS can renegotiate with the union. This plan would give USS some time and money to invest in one of the other options for CSP technologies. • CSP at Mon Valley: USS had investigated the possibility of adding 3MM tons of capacity in CSP at Mon Valley through three or four caster strands. While difficult, maybe more investigation can make this process feasible. CSP technology would bring USS closer to Nucor’s projected low costs, but not all the way there. This would still be a short-term strategy if USS decided to increase capacity, as there are other cost advantages that Nucor’s minimill production model still has. • NEW CSP greenfield project: Invest in new greenfield plant operating on similar models as the minimills. While this may not be very financially viable in the short run – given the success already enjoyed by minimills, it is necessary for USS to start shifting its assets in that direction for long term survival in the market.
Through research and analysis conclude there may be the possibility to conclude that there will be ample demand and orders to pay back for this investment in conventional casting technology in approximately 10 years. Then they can