Although cutting fluids represent only about 0. 25% of the annual expenditures of manufacturers, they are an increasingly important element in a company's profitability. The reason is not just the cost of the fluids themselves, though prices have risen for petroleum-based fluids. More insistent are government regulations that govern dumping of effluents and the cost of hauling used fluids away. This article describes a closed-system approach of handling cutting fluids that achieves up to 90% recovery. Payback on this system can be expected in about one year. Recycling cutting fluids in this way can solve waste-disposal problems while simultaneously improving productivity.