(FORTUNE Magazine) – EMMANUEL KAMPOURIS, the Egyptian-born CEO of American Standard, studies the Bible not just for moral lessons, but for management guidance too. His idol is the redoubtable Nehemiah, who in 445 B.C. rallied a small group of Israelites to rebuild the wall around Jerusalem in just 52 days. ''It's an example of excellent leadership and smart management,'' marvels Kampouris. Inspired by the Old Testament, Kampouris is performing an epic feat of his own. In the past five years he has overcome the double scourge of huge debt and depressed markets to steer his company, a diversified manufacturer, from near ruin to robust health. Kampouris's strategy is a model for managers in mature industries. He has succeeded by relentlessly reducing American Standard's appetite for working capital, especially that tied up in inventories. His ability to run a company with annual revenues of $4.2 billion on a shoestring has won the admiration of Jack Welch, the thrifty boss of General Electric. To study how Kampouris does - it, Welch is dispatching GE teams to three of American Standard's U.S. plants. American Standard's travails began in 1989 when tool manufacturer Black & Decker launched a hostile takeover bid. To rebuff the attack, Kelso & Co., a New York investment firm, engineered a leveraged buyout. Today Kelso owns 73% of American Standard, while employees hold the rest. The deal swamped American Standard with $3.1 billion in junk-bond and costly bank debt. Cash flow barely covered the interest and amortization payments of $325 million a year. Recalls Kampouris, a longtime company employee: ''We could not have survived a lengthy recession. And even in good times, we couldn't invest much in the business.'' By planning for the worst, Kampouris saved the company. In the early 1990s markets soured in all three of American Standard's businesses: plumbing supplies, air conditioners, and brakes for trucks and buses. The U.S. construction slump hobbled sales of bathroom fixtures and air conditioners, while the recession in Europe -- American Standard's largest automotive market -- slammed production of brakes. Faced with static sales and huge interest payments, Kampouris reached for a pot of gold: American Standard's $735 million in working capital. He set the Nehemiah-like goal of reducing it to zero by 1996. That's an amazing target; U.S. companies, on average, use more than 15 cents in working capital from each $1 of sales. To get to zero, a company must push inventories so low they can be financed without borrowing. The idea is to deliver goods -- and to bill customers -- more rapidly, then use the customers' money to pay for minimal stocks, without speeding up payments to suppliers. At American Standard, Kampouris introduced a lean manufacturing system called demand flow technology. Under demand flow, plants manufacture products as customers order them. Suppliers deliver straight to the assembly line, reducing stocks of parts, and plants ship the products as soon as they're completed, thus cutting the inventory of finished goods. DEMAND FLOW has revitalized the factory in Lexington, Kentucky, that manufactures cool- and hot-air blowers for commercial buildings. In 1990 the plant churned out huge volumes of single components in long production runs. Metal frames, fans, and other parts covered ten acres of blacktop. It took an average of 15 days to assemble a machine. Today, small workstations produce a unit's components when it is ordered. The parts can be made and assembled in ( no more than two days. In three years inventories at the Lexington plant have dropped from $9 million to $5.5 million, despite a 40% rise in output. Overall, American Standard has pared its inventories more than 50%, to $326 million, since 1990. As a result, working capital now absorbs just 5 cents from each $1 of sales. By saving interest payments on supplies, the company has increased its cash flow by $60 million a year. Its renewed financial vigor has charmed creditors. In 1992 and 1993 it refinanced $1.5 billion in loans and junk bonds at far lower interest rates, generating another $40 million in extra cash flow. Kampouris is using the $100 million gained to expand his businesses. American Standard is investing heavily in China, where it is now the largest foreign producer of toilets and faucets. And in a new joint venture with Rockwell, it is selling its advanced antilock brakes to Mack Truck. With sales and earnings growing in all three of his businesses, Kampouris is planning a public stock offering within the next year. But the good times haven't slowed his crusade for zero working capital. He's even hounding the head of the office supply room at headquarters to go lean on pencils and paper clips. ''Once we get the system down,'' he says, ''we could double the size of the business without adding any working capital.'' For this corporate Nehemiah, nothing is impossible.