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Pamela Huggins, vice president and treasurer at $7 billion diversified manufacturer Parker Hannifin Corp., recalls how it wasn’t until early last year that the company was convinced the recession of 2001 was really over. New orders for the Cleveland-based producer of everything from aerospace equipment to refrigeration devices were mostly flat until early 2004, some 18 months after the official end of the recession. Then, business took off like a rocket. “We really had a tremendous ramp-up,” says Huggins, with year-over-year order spikes between 20% and 30% across many divisions, and similar growth into this year. At the same time, an earlier overhaul of Parker’s procurement and manufacturing methods toward leaner, lower inventory approaches chopped operational costs, pushing profit margins to near record levels. The newfound efficiency also allowed Parker Hannifin to cut its capital spending as a percent of sales dramatically, from 5.1% in 1998 to about 1.9% this year. The result: record cash flow.

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