Cornwell Performance Products

Abstract

It was May 2007. Earlier in the week, Cornwell Performance Products (CPP), a division of the multinational chemical manufacturer Cornwell, Inc., had notified its largest customer that the price of hydrofluoric acid (HF) would increase at the end of the year. This action was in accordance with an environmental clause in CPP's contract with Epsilon Refinery Group. The contract provided a 60-day period following notification during which time the parties could attempt to reach a mutually satisfactory agreement. If an agreement could not be reached, Epsilon would have the option to terminate the contract and purchase its HF from another supplier (probably DuPree, Cornwell's largest competitor) or build its own HF production unit. Regardless, failure to keep Epsilon under contract would threaten CPP's continued profitability, thus making the pending discussions with Epsilon among the most important in recent history. Excerpt UVA-QA-0795 Rev. Jun. 11, 2013 Cornwell Performance Products It was May 2007. Earlier in the week, Cornwell Performance Products (CPP), a division of the multinational chemical manufacturer Cornwell, Inc., had notified its largest customer that the price of hydrofluoric acid (HF) would increase at the end of the year. This action was in accordance with an environmental clause in CPP's contract with Epsilon Refinery Group. The contract provided a 60-day period following notification during which time the parties could attempt to reach a mutually satisfactory agreement. If an agreement could not be reached, Epsilon would have the option to terminate the contract and purchase its HF from another supplier (probably DuPree, Cornwell's largest competitor) or build its own HF production unit. Regardless, failure to keep Epsilon under contract would threaten CPP's continued profitability, thus making the pending discussions with Epsilon among the most important in recent history. Cornwell Performance Products CPP had come off a record year in sales and earnings, and 2007 was off to a promising start. See Exhibit 1 for the 2007 first quarter financial results for Cornwell, Inc., and CPP. The record performance was the result of strong demand for HF coupled with limited supply. . . .