Halloran Metals – Case Solution

Halloran Metals and Allied Metals are rivals in the Northeast steel service center industry. They exercised different options in relation to their logistics and operating strategies. One releases supply from a central location while the other works from seven warehouses. This case study allows students to analyze the impact of each of these options, particularly in a fiscal recession.

​Roy D. Shapiro
Harvard Business Review (683062-PDF-ENG)
December 10, 1982

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Case answers for Halloran Metals

Case Objective – Halloran Metals

To analyze whether Halloran Metals is able to defend its position and market share against Allied Metals with its ‘single centralized inventory’ strategy.

The Steel Industry

• A very competitive industry with multiple strong players from both the local and global markets.
• Typical output from integrated steel producers fell into two basic categories.
• They did not usually sell to smaller customers who ordered below 20 tons, such orders were satisfied by steel service centers.
• The economic downturns pushed the people to look-into smaller service centers for purchase and move away from larger mills.

* Ingots and semi-finished steel products.

* Finished steel products.

The North American Steel Service Center Industry

• It took about 27 Million tons of output (about 25%) from the American steel industry.
• Most of the processing done was stage 1 processing which involved minor conversion from finished steel production to the specification mentioned by the customer.
• The equipment for this needed very less investment.
• Intermediate Processing required considerably larger investments but yielded more returns.
• SSCI predicted average growth of 3% to 6% per annum for the service industry.
• In due course, they became a middle layer between the mills and the end consumer.

Halloran Metals

• One of the major steel service centers in the US which had an average sales of $170 M
• The company was privately owned and relied majorly on its managers
• Halloran incorporated two primary corporate principles
• Service to a broad base of customers
• Establishing a market position through specialization.
• With 12 product categories each containing anywhere from 35-line items (pipes) to 1,400-line items(cold-finished bars), Halloran Metals offered over ten thousand-line items in all.
• Split the customers into 3 categories
• Key – Above $80,000
• Major – $20,000 – $80,000
• Others – Below $20,000

Organizational Chart

Allied Metals

• Allied was the largest and oldest independent regional service center in the New England area. Founded in 1945, Allied was a publicly held company that had carved an impressive market position for itself with 2000 revenues of over $180 million.
• Their growth was focused on adding volume to its Lowell facility which was 6 times larger than the largest facility of Halloran Metals.
• They had approximately 3000 customers and 6000 product lines.

Operational Strategies

Halloran Metals