<PAGE>

                                                                    EXHIBIT 10.5

                              Employment Agreement

     This Agreement is made and entered into this 21st day of March, 1997, by
and between SpeedFam International, Inc., an Illinois corporation (hereinafter
referred to as the "Company") and Robert R. Smith (hereinafter referred to as
the "Employee").

                              W i t n e s s e t h:

     Whereas, the Company desires to retain the services of the Employee in the
capacities set forth herein, and the Employee desires to be employed by the
Company in such capacities;

     Now Therefore, in consideration of the promises and mutual covenants herein
contained, the Company and the Employee hereby agree as follows:

            1. Employment.  The Company hereby employs the Employee and the
     Employee hereby accepts employment with the Company upon the terms and
     conditions hereinafter set forth and subject to the policies as published
     in the Company's Employee Handbook, as from time to time amended.

            2. Term.  Subject to the provisions for earlier termination
     hereinafter set forth in Section 12 of this Agreement, the term of
     employment hereunder shall commence on the date hereof and end on the first
     May 31st after the date hereof.

            3. Automatic Extension.  The term of employment of the Employee
     hereunder shall automatically continue for additional one (1) year terms
     upon the same terms and conditions contained herein unless either the
     Company or the Employee shall notify the other at least six (6) months
     prior to the expiration of the initial one (1) year term or any renewal
     term of its or his intention to terminate the term of employment of the
     Employee as of the end of the initial one (1) year term or any such renewal
     term, as the case may be.

            4. Compensation.  The Company agrees to provide the Employee with
     the following compensation for all services rendered under this Agreement:

                  4.1.  Salary.  During the term hereof, the Company shall pay
          to the Employee a Base Annual Salary of Ninety-Six Thousand Seven
          Hundred Twenty Nine (96,729) British Pounds Sterling, payable in
          accordance with the standard payroll practices of the Company
          (including any salary-reduction contributions to plans or programs
          maintained by the Company).  Further, the Base Annual Salary of the
          Employee shall be reviewed annually by the Company and adjusted as
          appropriate.
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                  4.2.  Annual Incentive Opportunity.  During the term of this
          Agreement, the Employee shall participate in the annual incentive plan
          maintained by the Company for its executives.

                  4.3.  Long-term Incentive Opportunity.  During the term of
          this Agreement, the Employee shall participate in any long-term
          incentive plan maintained by the Company, including, but not limited
          to, stock options, performance shares, restricted stock and long-term
          cash incentive plans, in a manner consistent with other executives of
          the Company, as determined by the Board.

                  4.4.  Other Benefits.  To the extent the Employee is eligible
          under the appropriate laws, the Employee shall be entitled to
          participate in and receive benefits under any and all pension, profit-
          sharing, health, disability and insurance plans, if any, which the
          Company may maintain.  The Employee shall also receive an allowance of
          Eighteen Thousand Seven Hundred Twenty-Two (18,722) British Pounds
          Sterling annually for automobile expenses.

            5. Duties.  The Employee shall, subject to election and removal by
     the Board of Directors of SpeedFam Limited, a United Kingdom corporation
     and subsidiary of the Company in their sole discretion, serve as Managing
     Director of SpeedFam Limited.  As such, the Employee's duties and
     responsibilities shall include, but shall not be limited to, establishing
     objectives, plans and budgets for the European operations of the Company.
     The Managing Director will be accountable for meeting preestablished profit
     and loss goals and the attainment of current and long-range objectives.
     The Managing Director shall report to the President/Chief Operating Officer
     of the Company.  The Employee shall also be responsible for the performance
     of such other duties and responsibilities as may be prescribed from time to
     time by the President/Chief Operating Officer of the Company or the Board
     Directors of SpeedFam Limited.

            6. Extent of Service.  The Employee shall devote the Employee's full
     business time, attention, and energies to the business of SpeedFam Limited
     and its Affiliates and shall not, during the term of this Agreement, be
     engaged in any other business activity, whether or not such activity is
     pursued for gain, profit, or other pecuniary advantage, unless written
     approval is first secured from the Board of Directors of SpeedFam Limited.

            7. Working Facilities.  The Employee shall be furnished with office
     space, furnishings, secretarial support and such other facilities and
     services which are reasonably necessary for the performance of the
     Employee's duties.

            8. Expenses.  The Company will reimburse the Employee for all
     reasonable business expenses which are incurred by the Employee in the
     promoting of the interests of the Company upon presentation by the Employee
     from time to time (at 

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     least monthly) of an itemized account of such expenses containing such
     detail as may reasonably be required by the Board of Directors of SpeedFam
     Limited.

            9. Vacation.  The Employee shall be entitled to paid vacation in
     accordance with Company policy.  All vacation time shall be taken by the
     Employee at such times as shall be mutually agreed upon by the Employee and
     the President/Chief Executive Officer of the Company.

            10.  Disability.  If, as a result of sickness or other disability,
     the Employee is not able to perform the Employee's duties, this Section 10
     shall apply as follows:

                  10.1.  For the first ninety (90) consecutive days of sickness
          or other disability the Company shall continue to pay the Employee
          full Base Annual Salary (reduced by any payments from any short-term
          disability plan which may be maintained by the Company), and shall
          continue to pay premiums on then existing group life, health,
          disability and other insurance plans with respect to which the
          Employee participates, provided the Employee remains eligible to
          participate thereunder.

                  10.2.  If the disability or other sickness continues past
          ninety (90) consecutive days, the Company, in its sole discretion, may
          elect to place the Employee on Disability Leave of Absence.  During
          such period, the Company shall, for the remainder of the contract
          term, or until the Employee returns from such Disability Leave of
          Absence, continue to pay premiums on then existing group life, health,
          disability and other insurance plans with respect to which the
          Employee participates, provided the Employee remains eligible to
          participate thereunder.  Further, the Company shall pay to the
          Employee, two-thirds (2/3) of the Employee's Base Annual Salary,
          reduced by any payments for which the Employee is eligible from any
          disability insurance programs maintained by the Company.

            11.  Death.  If the Employee dies during the term of this Agreement,
     the Company shall pay to the Employee's Beneficiary (or if there is no
     named Beneficiary, the estate of the Employee), the compensation as set
     forth in Section 4 of this Agreement, for the period up to the date of the
     Employee's death.  In no event shall the Company be obligated to pay to any
     person any other compensation with respect to any period following the date
     of the Employee's death.

            12.  Termination of Employment.

                  12.1.  Termination for Cause.  The Company may terminate the
          Employee's employment under this Section of the Agreement for Cause.
          Cause shall be defined as:

                       12.1.1.  The Employee's failure or refusal to perform the
               Employee's duties as provided for in this Agreement, occasioned
               by reason other than 

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               sickness or other disability of the Employee, which is not cured
               within ten (10) business days after written notice from the
               Company specifying such failure or refusal has been delivered to
               the Employee;

                       12.1.2.  Commission by the Employee of any materially
               fraudulent, dishonest or other act of misconduct in the
               performance of the Employee's duties hereunder, other than at the
               specific direction of the Board; or,

                       12.1.3.  Conviction for any felony or crime involving
               moral turpitude.

                       12.1.4.  Following a Termination for Cause, the Company
               shall pay to the Employee the Base Annual Salary provided in
               Section 4.1 accrued up to the date of termination.  In no event
               shall the Company be obligated to pay any other compensation with
               respect to any period before or after the date of such
               termination.

                  12.2.  Termination Following a Change of Control.  If, during
          a period of two (2) years following a Change of Control, the
          employment of the Employee is terminated by the Company for any reason
          other than Cause, or if the Employee is subject to Constructive
          Termination, benefits shall be payable under this Section 12.2.

                       12.2.1.  The Employee shall receive within thirty (30)
               days of termination a single payment equal to two (2) times the
               sum of (i) the Employee's highest Base Annual Salary during the
               Employee's employment with the Company and (ii) the Employee's
               highest target annual incentive award opportunity.

                  12.3.  Other Termination at the Election of the Company.  The
          Company may elect to terminate the employment of the Employee for any
          reason other than Cause or following a Change of Control, upon written
          notice to the Employee, accompanied by payment in a lump sum of:

                       12.3.1.  All compensation accrued up to the date of
               termination;

                       12.3.2.  An amount equal to one (1) times the Employee's
               Base Annual Salary of record on the date of termination.

            13.  Restrictive Covenants.

                  13.1.  Employee understands that the Company's business
          involves the design, improvement, development, testing, manufacturing,
          marketing and sale of products, and that this business requires
          substantial investments in capital and substantial commitments of time
          and effort by the Company's employees.  The 

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<PAGE>
 
          Employee further understands that, as a result, certain of the
          Company's personnel, including the Employee, acquire information with
          respect to customer goodwill, trade secrets and Confidential
          Information, which, of itself and apart from the Employee's abilities,
          could be of great value to a competitor of the Company, potential
          competitors of the Company, and to others.

                  13.2.  The Employee further understands that employment with
          the Company is conditioned upon the Company's being able to place
          complete trust and confidence in the Employee and to rely on the
          Employee's doing everything possible to avoid the disclosure or use of
          Confidential Information to persons, corporations, organizations and
          others outside the Company, which may become known to, or subject to
          the control of the Employee during the term of employment hereunder.
          The Employee also understands that competition in the manufacture,
          sale, and development of products is not local in nature or scope, but
          involves various corporations, organizations and others located within
          the United States and throughout the world.

                  13.3.  In recognition of these circumstances and for the
          purpose of inducing the Company to employ the Employee (or continue
          the employment of the Employee with appropriate compensation reviews)
          to repose trust and confidence in the Employee, and to make
          Confidential Information available to the Employee, the Employee
          agrees that the following restrictive covenants are necessary and
          proper for the protection of the Company.

                  13.4.  Subject to Section 13.6 below, the Employee will
          promptly disclose and assign to the Company, without the right to any
          form of compensation therefore, every invention that the Employee,
          individually or jointly with others, during the term of the Employee's
          employment with the Company and for a period of one (1) year following
          termination of such employment for any reason, may discover, invent,
          conceive or originate, relating in any way to the present or
          contemplated scope of the Company's business with regard to any of its
          clients, customers or vendors or to any Product, Technology, process,
          or device dealt in, used or under development or manufacture by the
          Company for itself or others or that results from or may be suggested
          by any work the Employee may do for the Company or at the Company's
          request.  The Employee will fully cooperate with the Company in
          applying for and securing in the name of the Company or its designee
          patents or copyrights with respect to said Inventions in each country
          in which the Company may desire to secure patent or copyright
          protection.  The Employee will promptly execute all proper documents
          presented to the Employee for signature by the Company to enable the
          Company or its designee to secure such patent or copyright protection
          and to transfer legal title therein, together with any patents or
          copyrights that may be issued thereon or in connection therewith, to
          the Company or its designee.  The Employee will give such true
          information and testimony as may be requested of the Employee by the
          Company relative to any of said Inventions.

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<PAGE>
 
                  13.5.  Subject to Section 13.6 below, the Company shall have
          the exclusive right to use in its business, and to make, use and sell
          products, processes, and/or services arising out of any Invention,
          whether or not patentable, which is assignable by the Employee to the
          Company pursuant to Section 13.4 above.

                  13.6.  Pursuant to Section 2(3) of the Illinois Employee
          Patent Act, the Employee is hereby notified that Sections 13.4 and
          13.5 above do not apply to an Invention for which no equipment,
          supplies, facility, technology, confidential information, or trade
          secret information of the Company was used and which was developed
          entirely on the Employee's own time, unless:

                       13.6.1.  The Invention was related:

                            13.6.1.1.  To the business of the Company; or

                            13.6.1.2.  To the Company's actual or demonstrably
                    anticipated research or development;

                    or;

                       13.6.2.  The Invention results from any work performed by
               the Employee for the Company.

                  13.7.  The Employee agrees that all financial data, customer
          lists, plans, contracts, agreements, literature, manuals, catalogues,
          brochures, books, records, computer files or applications, maps,
          correspondence, and other materials furnished or made available to the
          Employee by the Company or an Affiliate, or any of its clients, or
          created, prepared or secured through the efforts of the Employee,
          relating to the business conducted by the Company or an Affiliate,
          whether or not containing any Confidential Information, are and shall
          remain the property of the Company, and the Employee agrees to deliver
          all such materials, including all copies thereof, to the Company upon
          termination of the Employee's employment hereunder, or at any other
          time at the Company's request.

                  13.8.  Other than as expressly directed by the Company and in
          the performance of duties to the Company or with the expressed
          permission of the Company, the Employee shall never, during or
          following the Employee's employment with the Company, directly or
          indirectly, sell, use, disclose, lecture upon, or publish data of
          information containing or relating to any Confidential Information or
          Technology of the Company or its Affiliates or any Invention
          assignable to the Company pursuant to the terms of Section 13.4 above.

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<PAGE>
 
                  13.9.  During the term of the Employee's employment with the
          Company and for a period of two (2) years after the termination
          thereof, the Employee agrees that the Employee will not:

                       13.9.1.  Own or have any interest, directly or
               indirectly, in or act as an officer, director, agent, employee,
               or consultant of, or assist in any way or in any capacity, any
               person, firm, association, partnership, corporation or other
               entity which sells or provides products or services in
               competition with the Company or its Affiliates anywhere within
               the world where any Confidential Information acquired by the
               Employee would reasonably be considered advantageous to such
               other competing entity, or

                       13.9.2.  Directly or indirectly entice, induce or in any
               manner influence any person who is, or shall be, in the service
               of the Company or its Affiliates to leave such service for the
               purpose of engaging in business or being employed by or
               associated with any person, firm, association, partnership,
               corporation or other entity which sells or provides products or
               services in competition with the Company or its Affiliates
               anywhere in the world.

               If any court shall finally hold that the time, territory or any
               other provision of this Section 13.9 constitutes an unreasonable
               restriction against the Employee, the Employee agrees that the
               provisions hereof shall not be rendered null and void, but shall
               apply as to such time, territory, and other extent as such court
               may determine to be a reasonable restriction under the
               circumstances involved.

                  13.10.  The Employee understands that if there is a breach by
          the Employee of any duty to the Company with respect to any
          Confidential Information or Invention, the Company may suffer
          irreparable injury and may not have adequate remedy at law.  As a
          result, the Employee agrees that if a breach of this Agreement occurs,
          the Company may, in addition to any other remedies available to it,
          bring an action or actions for injunction, specific performance, or
          both, and have entered into a temporary restraining order, preliminary
          or permanent injunction, or other action compelling specific
          performance.

            14.  Definitions.

                  14.1.  "Affiliate" means any entity in which the Company, or
          any entity which owns, directly or indirectly, a majority ownership
          interest in the Company, owns, directly or indirectly, at least a
          twenty percent (20%) interest in such entity.

                  14.2.  "Base Annual Salary" means the annualized value of the
          Employee's salary, based on the most recent pay period.

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<PAGE>
 
                  14.3.  "Board" means the Board of Directors of the Company.

                  14.4.  "Change in Duties" means:

                       14.4.1.  A significant reduction in the nature or scope
               of the Employee's authority or duties from those immediately
               prior to the date on which a Change of Control occurs;

                       14.4.2.  A material reduction in the Employee's Base
               Annual Salary;

                       14.4.3.  Exclusion from any incentive program from which
               the Employee was previously eligible, or which other executives
               with comparable duties participate in;

                       14.4.4.  A change in location of the Employee's principal
               place of employment by more than fifty (50) miles;

                  14.5.  "Change of Control" means:

                       14.5.1.  Any "person", including a "group" as determined
               in accordance with Section 13(d)(3) of the Exchange Act, other
               than James N. Farley, his spouse, descendants, or any Trust for
               the benefit of James N. Farley, his spouse or descendants, who
               is, or becomes, the beneficial owner of securities of the Company
               representing more than fifty percent (50%) of the combined voting
               power of the Company's then outstanding securities, other than by
               reason of any redemption of stock resulting from the death of
               James N. Farley or his spouse;

                       14.5.2.  As a result of, or in connection with, any
               tender offer or exchange offer, merger or other business
               combination, sale of assets or contested election, or any
               combination of the foregoing transactions (a "Transaction") the
               persons who constituted the Board of the Company prior to the
               Transaction shall cease to constitute a majority of the Board of
               the Company or any successor to the Company.

                       14.5.3.  The Company is merged or consolidated with
               another corporation and as a result of the merger or
               consolidation, less than seventy percent (70%) of the outstanding
               voting securities of the surviving or resulting corporation shall
               then be owned in the aggregate by the former stockholders of the
               Company;

                       14.5.4.  A tender offer or exchange offer is made and
               consummated for the ownership of securities of the Company
               representing more than fifty percent (50%) of the combined voting
               power of the Company's then outstanding voting securities; or,

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<PAGE>
 
                       14.5.5.  The Company transfers substantially all of its
               assets to another corporation of which the Company owns less than
               fifty percent (50%) of the outstanding voting securities.

                  14.6.  "Code" means the Internal Revenue Code of 1986, as from
          time to time amended.

                  14.7.  "Company" means SpeedFam International, Inc., an
          Illinois corporation.

                  14.8.  "Confidential Information" means any and all Technology
          and/or information which:

                       14.8.1.  Is provided to the Employee by the Company;

                       14.8.2.  Is created, developed, or otherwise generated by
               or on behalf of the Company;

                       14.8.3.  Concerns or relates to any aspect of the
               Company's business; or

                       14.8.4.  Is, for any reason, identified by the Company as
               confidential.

                       14.8.5.  Notwithstanding the foregoing provisions of this
               Section 14.8, Confidential Information shall not include such
               information which the Employee can show, clearly and
               convincingly:

                            14.8.5.1.  Is publicly and openly known and in the
                    public domain;

                            14.8.5.2.  Becomes publicly and openly known and in
                    the public domain through no fault of the Employee; or

                            14.8.5.3.  Is in the Employee's possession and
                    documented prior to this Agreement, lawfully obtained from a
                    source other than from the Company, and not subject to any
                    obligation of confidentiality or restricted use.

                  14.9.  "Constructive Termination" means the voluntary
          termination of employment by the Employee following a Change in Duties
          following a Change of Control.

                  14.10.  "Exchange Act" means the Securities Exchange Act of
          1934, as from to time amended.

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<PAGE>
 
                  14.11.  "Invention" means any new or useful art, discovery, or
          improvement (including any technologies, tests, programs, products,
          concepts, ideas, apparatus, equipment, machinery, processes, methods,
          formulae, designs or techniques), whether or not related to a Product
          and whether or not patentable, and all the know-how related thereto.

                  14.12.  "Product" means any product or service which is, or
          may in the reasonable future, be manufactured, sold, designed,
          developed, considered by, or of interest to the Company or an
          Affiliate (including, but not limited to, any product or service
          involving CMP planarization technology, such as CMP-V tools or any
          free-abrasive machining, lapping, polishing and grinding).

                  14.13.  "Technology" means prototypes, models, concepts,
          inventions, circuit designs, drawings, hardware, technological
          developments and improvements, methods, techniques, systems,
          documentation, data, works of authorship, products, and related
          information whether or not patentable, copyrightable, and whether or
          not presently used or used in the future.

                  14.14.  "Voting Securities" mean any securities which
          ordinarily possess the power to vote in the election of directors
          without the happening of any precondition or contingency.

            15.  Miscellaneous.

                  15.1.  This Agreement supersedes all prior agreements and
          understandings by and between the Employee and the Company and any of
          its Affiliates or their respective directors, officers, shareholders,
          employees, attorneys, agents, or representatives, including any
          Severance Agreement, Employment Letter, Employment Terms, Non-
          Disclosure Agreement and/or Employment Agreement and constitutes the
          entire agreement between the parties, respecting the subject matter
          hereof and there are no representations, warranties or other
          commitments other than those expressed herein.

                  15.2.  The Employee represents and warrants to the Company
          that the Employee is not a party to or bound by, and the employment of
          the Employee by the Company or the Employee's disclosure of any
          information to the Company or its use of such information will not
          violate or breach any employment, retainer, consulting, license, non-
          competition, non-disclosure, trade secrets or other agreement between
          the Employee and any other person, partnership, corporation, joint
          venture, association or other entity.

                  15.3.  No modification or amendment of, or waiver under, this
          Agreement shall be valid unless signed in writing and signed by the
          Employee and an appropriate officer of the Company, pursuant to
          expressed authority of the Board.

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<PAGE>
 
                  15.4.  The Employee agrees to indemnify the Company and its
          Affiliates against, and to hold the Company and its Affiliates
          harmless from, any and all claims, lawsuits, losses, damages,
          expenses, costs and liabilities, including, without limitation, court
          costs and attorney's fees, which the Company or any of its Affiliates
          may sustain as a result of, or in connection with, either directly or
          indirectly, the Employee's breach or violation of any of the
          provisions of this Agreement.

                  15.5.  The Employee hereby agrees that if the Employee
          violates any provision of this Agreement, the Company will be
          entitled, if it so elects, to institute and prosecute proceedings at
          law or in equity to obtain damages with respect to such violation or
          to enforce the specific performance of this Agreement by the Employee
          or to enjoin the Employee from engaging in any activity in violation
          hereof.

                  15.6.  The waiver by either party to this Agreement of a
          breach of any provision of this Agreement by the other shall not
          operate or be construed as a waiver of any subsequent breach.

                  15.7.  Any communication which may be required under this
          Agreement shall be deemed to have been properly given when delivered
          personally at the address set forth below for the intended party
          during normal business hours, when sent by facsimile or other
          electronic transmission to the respective facsimile transmission
          numbers of the parties set forth below with telephone confirmation of
          receipt, or when sent by U.S. registered or certified mail, return
          receipt requested, postage prepaid as follows:

          If to the Company:  SpeedFam Limited
                              c/o SpeedFam International, Inc.
                              7406 West Detroit
                              Chandler, AZ  85226
                              United States of America
                              Attention:  Chief Executive Officer
                              Facsimile:  602-961-2171
                              Confirm:  602-961-1600

          If to the Employee: Robert Smith
                              34 Bullmore Grove
                              Kennilworth 
                              Warwickshire CV8 2QT, England
                              Facsimile:  __________________
                              Confirm:  ___________________

          Notices shall be given to such other addressee or address, or both, or
          by way of such other facsimile transmission number, as a particular
          party may from time to time request by written notice to the other
          party to the Agreement.  Each 

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<PAGE>
 
          notice, request, demand, approval or other communication which is sent
          in accordance with this Section shall be deemed to be delivered, given
          and received for all purposes of this Agreement as of two (2) business
          days after the date of deposit thereof for mailing in a duly
          constituted U.S. post office or branch thereof, one (1) business day
          after deposit with a recognized overnight courier service or upon
          written confirmation of receipt of any facsimile transmission. Notice
          given to a party hereto by any other method shall only be deemed to be
          delivered, given and received when actually received in writing by
          such party.

                  15.8.  This Agreement shall inure to the benefit of and be
          binding upon the Company and the Employee and their respective heirs,
          personal representatives, successors and assigns.

                  15.9.  All claims, disputes and other matters in question
          arising out of, or relating to this Agreement, or the breach thereof,
          shall be decided by arbitration, pursuant to the rules established by
          the American Arbitration Association for the arbitration of such
          disputes, and such arbitration shall occur in Chandler, Arizona.

                  15.10.  This Agreement may be signed in multiple counterparts
          which when taken together shall constitute the entire Agreement.

                  15.11.  This Agreement shall be governed and construed in
          accordance with the laws of the State of Illinois.

     In Witness Whereof, the parties hereto have executed this Agreement as of
the day and year first above written.


                                     SpeedFam International, Inc. an Illinois
                                        Corporation


                                     By /s/ Makoto Kouzuma
                                        -------------------------------------
                                        Title President/COO
                                              -------------------------------

                                     Employee
                                     /s/ R.R. Smith
                                     ---------------------------------------- 
                                                  Robert R. Smith

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