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Parker Hannifin’s 100-Year Journey COPYRIGHT © 2017 Thomas A. Piraino Jr. and Parker Hannifin Corp. All rights are reserved. No part of this publication may be reproduced, distributed or transmitted in any form or by any means, including photocopying, recording or other digital or mechanical methods, without the prior written permission of the author, except in the cases of fair use as permitted by U.S. and international copyright laws. For permission requests, please submit in writing to the publisher at the address below: Published by: Smart Business Network 835 Sharon Drive, Suite 200 Westlake, OH 44145 Printed in the United States of America Cover and interior design: Stacy Vickroy Cover layout: April Grasso and Stacy Vickroy Interior layout: April Grasso and RJ Pooch Editor: Dustin S. Klein ISBN: 978-1-945389-95-5 (hardcover) ISBN: 978-1-945389-96-2 (e-book) Library of Congress Control Number: 2017941262 “It is doubtful if aeroplanes will ever cross the ocean...The public has...[imagined] that in another generation they will be able to fly over to London in a day. This is manifestly impossible.” —William Pickering, a Harvard astronomer, 1908i “Why shouldn’t I fly from New York to Paris?”ii —Charles A. Lindbergh on the St. Louis-Chicago Airmail run, September 1926 “To claim that...[a rocket could travel to the Moon] is to deny a fundamental law of dynamics.” —An editorial in The New York Times, January 13, 1920 “Houston, Tranquility Base here, the Eagle has landed.” —Neil Armstrong from the Moon, July 20, 1969 CONTENTS Foreword xi IntroductIon xiii PART 1: BUILDING THE FOUNDATION, 1885 TO 1927 Chapter 1: dreams 21 Chapter 2: FluId Power 33 Chapter 3: on the western Front 47 Chapter 4: hard tImes 55 Chapter 5: startIng over 73 Chapter 6: the sPIrIt oF st. louIs 83 PART 2: CREATING A SUSTAINABLE CULTURE, 1927 TO 1945 Chapter 7: the lIndbergh eFFect 105 Chapter 8: the great dePressIon 117 Chapter 9: storm clouds 137 Chapter 10: another world war 153 Chapter 11: casualtIes 177 PART 3: DIVERSIFYING, 1945 TO 1957 Chapter 12: survIval 193 Chapter 13: boom tImes 211 PART 4: BREAKING BOUNDARIES, 1958 TO 1970 Chapter 14: the Jet age 227 Chapter 15: the sPace race 243 Chapter 16: tranquIlIty base 259 Chapter 17: aPollo 13 279 PART 5: COMPETING IN A GLOBAL MARKETPLACE, 1971 TO 2000 Chapter 18: another Parker at the helm 299 Chapter 19: PassIng the torch 315 Chapter 20: FIrst stePs to the world 335 Chapter 21: becomIng a multInatIonal 351 PART 6: ENGAGING A NEW CENTURY, 2000 AND BEYOND Chapter 22: harnessIng Parker’s collectIve Power 371 Chapter 23: endurIng values 385 APPENDICES Appendix A: acknowledgments 407 Appendix B: sources 411 Appendix C: endnotes 419 Appendix D: Index 433 FOREWORD NASA/Scan by J.L. Pickering NASA/Scan Jim Lovell at the Apollo 13 launch pad April 6, 1970. arker’s evolution from the supplier of the fuel system on the Spirit of St. Louis to the maker of the valves to control the propulsion system P that brought the Apollo 13 astronauts safely back to Earth is a great American success story. I should know. I owe my life, and the lives of my fellow crew members, to the commit- ment, steadiness under pressure, and just plain courage of the Parker engi- neers who never gave up on us, and never left their posts until they knew we had safely splashed down in the Pacific Ocean. Capt. James A. Lovell Jr. Lake Forest, Illinois January 2017 INTRODUCTION t was a daunting sight: A long gray train that lay hissing steam at the Cleveland Union Station, early on a July evening in 1918. The train, for- I merly known as the “20th Century Limited,” had been converted to a troop transport when America entered the Great War a year earlier. It was waiting to take a 32-year-old Army recruit named Arthur LaRue (“Art”) Park- er and hundreds of his companions on a trip that would end in France at the Western Front. Ahead of Art in France lay a stalemated war that had already consumed 7 million lives. Behind him in Cleveland lay everyone and everything he cared about—his parents, his two brothers, his sister, and his life-long dream, the company he had founded in March 1917 in a machine shop in a second-sto- ry loft on a bluff above the western bank of the Cuyahoga River. For 10 years, Art had scrimped and saved until he accumulated $6,000, enough to afford a few machines, the lease for the loft, and the salary for his partner, a wooden pattern maker named Carl Klamm. Now Art would have to defer his dream for the duration of the war and entrust his company to Klamm. Art named his company the Parker Appliance Co. In putting his name on the door, he was following the same impulse that drives artists to compose, write, draw, or sculpt a masterpiece—to make a lasting mark upon the world, even to achieve a type of immortality. Art used the term “appliance” in his company’s name because it was a synonym for products with a variety of applications. His ambition was to build a company that would use a new technology called fluid power, which would use air, water, oil and hydrau- xiv PARKER HANNIFIN’S 100-YEAR JOURNEY lic fluids under pressure to control moving parts in trucks, buses, trains, in- dustrial machinery, construction equipment, and a recent invention people were calling the “aeroplane.” The odds were stacked against Art, even before he left for the war. He had only one product, and not a single customer. Most of Art’s friends did not expect his company to survive the war. During the next 100 years, Art’s company defied the odds, growing to an enterprise with more than 50,000 employees, 9,000 independent distributors, more than 300 facilities in more than 50 countries, annual sales of more than $11 billion, more than 400,000 customers and hundreds of thousands of different products in every region of the world, powering nearly every type of machine that moves. I worked in Parker’s legal department for 33 years, starting in 1981. I was the company’s General Counsel, responsible for supervising all its legal work, from 1998 until I retired in 2014. One question kept recurring to me during my years at Parker: Why, I wondered, had the company prospered during one of the most tumultuous 100 years in history, while most of the companies that existed in 1917 failed? I found the answer in Parker’s offices, around the coffee machine, at employee parties, and in the company cafe- teria, as I heard Parker’s men and women tell stories of the obstacles their predecessors overcame to build the company. The stories Parker’s people chose to tell each other were meant to explain what it took to be a Parker person—to serve customers, to trust and empow- er each other, to work together as a team, and never to give in to hard times, no matter how long the odds. In the retelling, the shared stories of the best accomplishments of Parker’s men and women provided the foundation of the company’s culture. This book is a compilation of that 100 years of oral history. Jack Breen, a long-time Parker director and former CEO of Sherwin-Wil- liams, has explained the effects of Parker’s culture: “Parker people possess a rare feeling of family. Like family members, they never want to let anyone in the family down. This family attitude enables Parker leadership to always find the right way and right thing to do. This wonderful tradition of doing the right thing is somehow passed on to successive management generations. It’s just part of the Parker culture.”iii Parker’s men and women saw a higher purpose in their work—help- ing their customers power the machines that changed the world. Those customers included several of the most daring innovators of the last 100 INTRODUCTION xv years—Charles Lindbergh, Bill Boeing, Donald Douglas, Neil Armstrong, Jim Lovell, and Steve Jobs, as well as forward-looking companies such as General Electric, General Motors, Cincinnati Milacron, John Deere, Rolls- Royce, Lockheed Martin, United Technologies, Siemens, and Caterpillar. Helping customers make the world a better place gave Parker’s men and women meaning for their work. Their passion for their company’s mission gave them the will to persevere through a series of challenges, including an accident that destroyed most of the company’s assets, a bankruptcy, the Depression, two world wars, the Cold War, the Space Race, numerous recessions, unprecedented technological change, and the globalization of industrial markets. Hard times forged a bond among Parker’s employees. They learned they could survive in a fast-changing world by helping and caring for each other. They had a sense they were facing each crisis together. Secure in the knowl- edge their colleagues would support them, no matter what, Parker’s men and women were not afraid to take risks. Because they dared greatly, sometimes they failed greatly. When they failed, their fellow employees were there to pick them up and help them do better the next time. Every time they sur- vived a crisis, they became more convinced they could meet the next chal- lenge that came their way. The values espoused by Art Parker still guide the company. The seven chief executives who succeeded him shared his values—a desire to serve others, resilience in the face of crises, trust in their colleagues, and a fierce desire to win.