Halloran Metals – Case Solution

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Halloran Metals Case Answers

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