Harper Chemical Company

HARPER CHEMICAL COMPANY

The Harper Chemical Company (HCC) was a medium sized producer of industrial

chemicals, which sold its products primarily to customers in the paper industries and the paint industries. In 1980, HCC diversified into the production of a mineral called Dominite. By acquiring the Dominite activities, HCC hoped it would yield at least 15% return on investment after taxes. In early 1980, the HCC board of directors authorised the construction of a processing plant having a 40 000 tons capacity at a cost of $4.5 million. As of the end of 1985, the Dominite operation had accumulated a $75 million before-tax loss and the general management of HCC is confronted with the decision to re-launch or to sell the Dominite operation.

The product benefits of Dominite

Dominite can be used as raw material as a replacement for talc in two major

industries: the ceramic (55%) and the paint (35%) industries. Dominite can also be used in a wide variety of products (10%) such as cement, insulating materials, plastic floor tiles and certain types of glass.

The ceramic industry

Dominite has a potentially large use as a