SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
 (Mark One)

( X )     Annual  Report Pursuant  to  Section 13  or  15(d) of  the  Securities
          Exchange Act of 1934 (No Fee Required)

          For the fiscal year ended December 31, 1997 or

(   )     Transition  Report Pursuant to Section  13 or 15(d)  of the Securities
          Exchange Act of 1934 (No Fee Required)

Commission file number 1-500
                                  PORTEC, INC.
             (Exact name of Registrant as specified in its charter)

      Delaware                          36-1637250
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)          Identification Number)

One Hundred Field Drive, Suite 120, Lake Forest, Illinois    60045
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code: (847) 735-2800

Securities registered pursuant to Section 12(b) of the Act:

                                        Name of each exchange on
Title of each class                     which registered
Common Stock -- $1 par value            New York Stock Exchange
     (voting)                           Chicago Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None


     Indicate by  check mark whether  the Registrant (1)  has filed  all reports
required  to be filed by  Section 13 or 15(d) of  the Securities Exchange Act of
1934 during the  preceding 12 months, and  (2) has been  subject to such  filing
requirements for the past 90 days.  Yes  X   No ___.

[X]  Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge, in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

     As of  March 25, 1998,  4,454,813 shares of Registrant's  common stock were
issued and  outstanding and the aggregate market value of shares (based upon the
closing price for such shares shown on the Composite Tape on  that date) held by
non-affiliates of Registrant was  approximately $69,050,000.  For this  purpose,
non-affiliates  are deemed  to  be all  stockholders  other than  directors  and
officers of the Registrant.





                                     PART I



Item 1.  Description Of Business.
    (a)  General Development Of Business.

     Registrant (hereinafter referred  to as the "Company") was  incorporated in
Delaware  in  1928 as  Poor  &  Company,  combining  the businesses  of  several
companies which supplied the  railroad industry with a line of  track components
and equipment  and supplied other  industries with steel forgings.   Since then,
the  Company  has  changed   the  scope  of  its  operations   through  internal
development, acquisitions and dispositions  to include the manufacture and  sale
of materials handling equipment.  The Company's name was changed to PORTEC, Inc.
in 1968.

     On June  2, 1997, the Company executed an amendment to its Credit Agreement
("Credit  Agreement") with  the  American National  Bank  and Trust  Company  of
Chicago which  provides the Company with  a revolving credit facility.   None of
the Company's assets were required  to be pledged as security under  the amended
Credit Agreement.  For additional information on the Credit Agreement and Credit
Authorization  see  Note 7  of the  Notes  to Consolidated  Financial Statements
appearing on page 34.

     In November 1993, the  Company acquired the assets of Nor-East Equipment, a
manufacturer of conveyor systems for solid waste recycling facilities.

     On April  29, 1994,  the Company  acquired certain of  the assets  of Count
Recycling Systems, Inc. (renamed Countec).  Located in Des Moines, Iowa, Countec
is a  supplier of  materials recovery  facilities (MRF's)  for  the sorting  and
recycling of residential and commercial solid waste.

     In  early 1997, the Company began  a comprehensive examination of its three
then  current  businesses in  an effort  to  identify strategic  alternatives to
increase stockholder  value.  In December  1997, the Company sold  the assets of
its  Construction Equipment segment for cash and the assumption of substantially
all  the   related  liabilities.     The  Construction  Equipment   segment  was
headquartered in Yankton, South Dakota.  A portion of the cash proceeds was used
to reduce the Company's outstanding bank debt.

     Also in December 1997, the Company sold the assets of its Railroad Products
segment  for  cash  and   the  assumption  of  substantially  all   the  related
liabilities.  The Railroad  Products segment included four business units:   The
Railway Maintenance Products Division  in Pittsburgh, Pennsylvania; the Shipping
Systems Division in Oak  Brook, Illinois; Portec,  Ltd. in Lachine, Quebec;  and
Portec (U.K.) Ltd. located in North Wales.

     In  March 1998,  the  Company  announced an  agreement  to  merge with  MHD
Acquisition Corp.  The merger is subject to stockholders approval, and a special
meeting of stockholders is scheduled to be held in the second quarter of 1998.

     (b)  Financial Information About Industry Segments.

     Not required.

     (c)  Narrative Description Of Business.

     (i)  Description  Of Business,  Products  And Markets.   Portec's  business
includes  three  business divisions  in the  materials  handling industry.   The
Flomaster  Division and  the  Pathfinder Division  are  located in  Canon  City,
Colorado and the Countec Division is in Des Moines, Iowa.

     The  Flomaster   Division  produces  and  sells   specialty  belt  conveyor
components such as belt power turns  and spiral belt conveyors used to transport
material  through  turns and  from  one elevation  to another.    Markets served
include:  baggage and  package handling; warehousing and distribution;  food and
pharmaceuticals;  and printing.    The  products  are  sold  direct  or  through
representatives to original equipment manufacturers (OEMs)and end-users.

     Electronic  wire guidance  for  lift  trucks,  produced  and  sold  by  the
Pathfinder Division,  allows  automatic steering  of  manned and  unmanned  lift
trucks.   The products are sold  direct and through representatives  to OEMs and
end-users to the warehousing, distribution, hospital and general industries.

     The Countec  Division provides  conveyor systems  to municipal and  private
materials  recycling facilities for the  handling and sortation  of solid waste.
Sales are direct and through representatives to end-users.

     (ii)   Announced  New Products  Or Segments  Of  Material Importance.   The
Company regularly makes improvements  to its existing products and  develops new
products.  However, during 1997 these  activities did not require the investment
of  a material amount of the assets of the Company and this practice is expected
to continue in 1998.

     (iii)  Sources And Availability Of Materials.  Steel and steel fabrications
are the  principal materials used in the Company's  products.  There are a large
number of domestic and foreign suppliers of these materials.

     (iv)   Patents,  Trademarks And  Licenses.   The Company  owns a  number of
patents, trademarks  and licenses applicable to  each of its  business units and
considers them, in the aggregate, to be of competitive importance.  However, the
Company does  not consider that any single patent, trademark or license or group
of  patents, trademarks or licenses is of such importance that its or their loss
would materially affect the Company's business as a whole.

     (v)  Seasonality Of Business.  The demand for the Company's products is not
subject to seasonal fluctuations.

     (vi)   Working  Capital.   The Company's  working capital  requirements are
consistent  with  those of  other  industrial  companies  with which  it  is  in
competition.   The  Company had  current ratios  of  4.2, 2.7  and 2.1  to 1  at
December 31, 1997, 1996 and 1995, respectively.

     (vii)  Principal  Customers Of  Business.   The  Company's business  is not
dependent  upon  a single  customer.   In  1997,  the Flomaster  Division  was a
subcontractor to Lockheed Martin on a  postal project and sales to this customer
accounted for more than 10% of the Company's consolidated revenues.

     (viii) Backlog Of Orders.   The Company's backlog of orders  for continuing
operations  at December  31,  1997, was  $9,325,000,  compared with  backlog  at
December 31, 1996, of $6,413,000.  The backlog at December 31, 1997, is believed
to  be firm  and 100%  is deliverable  in 1998.   Orders  received in  1997 were
$28,903,000, a 15% increase from $25,201,000 in orders received in 1996.

     (ix)  Government Contracts.  The Company provides goods to various branches
or  departments  of the  United States  Government.  During 1997,  the Flomaster
Division  was a subcontractor on  a large postal  project which represented more
than 10%  of the  Company's consolidated revenues.   Other government  sales are
routine in  nature and do  not comprise  a significant amount  of the  Company's
business.

     (x)   Competitive Conditions.  The  markets in which the  Company sells its
products  are highly  competitive  in the  areas  of price,  delivery,  service,
warranty and product performance.   The Company competes with  several different
companies, some of which are larger and have greater financial resources.

     (xi) Research And Development.  The Company estimates research expenditures
for continuing operations related to the development
of new products and improvements of existing products were $57,000, $110,000 and
$45,000 for the  years 1997,  1996 and 1995,  respectively.   Customer-sponsored
research activities were not material in those years.

     (xii) Environment Expenditures.   Compliance with federal, state and  local
laws relating  to the discharge of  materials into the  environment or otherwise
relating to the  protection of the  environment did not  have a material  effect
upon  capital expenditures, earnings or  competitive position of  the Company in
1997 and are not expected to have a material effect on 1998 results.

  (xiii) Number Of Employees.  The number of persons employed  by the Company
as of December 31,  1997, was 212 compared with  671 at December 31, 1996.   The
decrease was principally attributable to the sales of the Company's Construction
Equipment and Railroad Products segments.

     (d) Financial Information Exports Sales.

     All of the Company's  continuing operations are in domestic  jurisdictions.
Export sales in 1997 were $1,595,000 as compared with $911,000 and $3,308,000 in
1996 and 1995, respectively.

Item 2.  Properties.

     The  Company's  principal  operations   are  conducted  at  the  designated
properties listed  below.  The buildings on these properties are of various ages
and construction,  generally considered  satisfactorily maintained  and suitable
for the  Company's operations and,  except as otherwise indicated,  are owned by
the Company.


United States Properties:

                    Approx.
Business            Sq. Ft.
Location            of Bldg.            Description


Lake Forest, Illinois              3,200     Principal  corporate office  of the
Company occupied
                              under lease expiring October 21, 1999.

Canon City, Colorado         61,000     Flomaster   and  Pathfinder   Divisions'
production
                              facility (owned facility).

Canon City, Colorado         22,000    Flomaster   Division's   production
facility occupied
                              under lease expiring October 1998.

Canon City, Colorado         91,800     Material   Handling   Group's  principal
office and
                              production facility (owned facility).

Des Moines, Iowa              5,000     Countec  Division's   principal  offices
occupied
                              under lease expiring October 1999.



Item 3.  Legal Proceedings.

     There are various lawsuits and claims pending against the Company.   In the
opinion of management, any  liabilities that may result  from such lawsuits  and
claims will not  materially affect  the consolidated financial  position of  the
Company.


Item 4.  Submission Of Matters To A Vote Of Security Holders.

     During  the fourth quarter  of 1997, there  were no matters  submitted to a
vote  of security holders of the Company  through the solicitation of proxies or
otherwise.


                              PART II
Item  5.   Market  For  The Registrant's  Common  Stock And  Related Stockholder
Matters.

     (a)   Principal  Markets.   The principal  markets on  which the  Company's
common stock  is traded  are the:   New  York Stock  Exchange and  Chicago Stock
Exchange.

     (b)  Approximate  Number of Holders of Common Stock.   Based on information
provided by  the Company's stock transfer agent, the number of holders of record
of the Company's common stock as of March 25, 1998 was 1,085.

     (c)   Stock Prices and Dividend Information.   The information contained in
the  Section entitled "Quarterly Stock & Dividend Information" appearing on page
44  presents for the years  1997 and 1996  quarterly high and low  prices of the
Company's common stock.  During the fourth quarter of 1996,  the Company resumed
paying quarterly  cash dividends at  the rate  of 8  cents per  share of  common
stock.   The first quarterly  dividend was  paid on December  16, 1996.   During
1997, cash dividends of 8 cents per common  share were paid in each of the  four
quarters.  The closing price for shares of common stock on the Composite Tape on
March 25, 1998 was $15.50.

     The Company's  Credit  Agreement  with American  National  Bank  and  Trust
Company of Chicago limits the Company's right to pay cash dividends to an amount
not  to exceed 50% of the cumulative consolidated  net income of the Company and
its  subsidiaries earned  in the  preceding fiscal  year of  the Company.   This
limitation has not affected the Company's quarterly cash dividend of 8 cents per
share  of common stock.   In addition,  the Company's merger  agreement with MHD
Acquisition  Corp.  prohibits the  payment  of dividends  without  MHD's consent
through July 31, 1998.
<TABLE>
<S><C>

Item 6.  Selected Financial Data.

FIVE-YEAR SUMMARY(1)
    For Years Ended December 31
                                                       1997        1996         1995        1994         1993
INCOME AND OPERATING DATA(2)
Net sales                                           $ 25,521     $ 27,217    $ 24,755     $ 16,943    $ 12,394
Cost of products sold                                 14,631       17,110      15,784        9,555       6,457
Selling, general and administrative expense            7,935        5,856       5,716        6,589       6,241
Depreciation and amortization                            703          606         464          390         270
Other income, net                                        234          130         455        1,201          62
Interest expense                                         635          788       8,051          527         641
Income from continuing operations before
 provision for taxes                                   1,851        2,987       2,441        4,007      <1,153>
Income tax provision (benefit)                           679         (596)        177           86        (172)
Income <Loss> from continuing operations               1,172        3,583       2,264          314        <981>
Income from discontinued operations, net of tax        2,866        3,308         634        6,511       5,677
Gain on disposal of discontinued operations,
 net of tax                                           11,263           -            -           -            -
Net income                                            15,301        6,891       2,898        6,825       4,696

FINANCIAL DATA
Working capital                                     $ 43,702     $ 25,713    $ 19,375     $ 12,797    $  8,554
Property, plant and equipment-net                      3,918       14,543      14,171       13,372      12,129
Total assets                                          64,458       66,218      57,818       57,522      42,478
Long-term debt                                             -       10,768      10,117        7,623       5,277
Stockholders' equity                                  49,516       34,986      28,028       24,959      17,744
Average common shares outstanding                  4,376,963    4,329,761   4,296,466    4,262,728   4,059,034
Average common shares and common equivalent
 shares outstanding                                4,539,301    4,576,358   4,596,469    4,572,468   4,464,937


PER SHARE OF COMMON STOCK (3)
Net income
 Basic                                              $   3.50    $   1.59     $    .68    $   1.60     $1.16
 Diluted                                                3.37        1.50          .63        1.49      1.05
Stockholders' equity-end of year                       11.31         8.00        6.47        5.83      4.19

Number of employees                                      212          671         637         779       619
Number of stockholders                                 1,085        1,168       1,262       1,335     1,412

(1)  Dollars  in thousands  except per  share data,  number of  stockholders, average number  of shares  outstanding and  number of
     employees.
(2)  Adjusted to reflect continued operations.
(3)  Adjusted retroactively for 10% stock dividends paid in December 1993 and 1994.

</TABLE>
Item 7.  Management's Discussion And Analysis Of Financial Condition And Results
Of Operations.

Management's  discussion and analysis  of the Company's  financial condition and
results  of  continuing  operations   consists  of  the  Company's  Consolidated
Financial Statements and notes thereto on  pages 27 through 43 and the following
information:




RESULTS OF OPERATIONS
1997 COMPARED WITH 1996

In early 1997,  the Company began a comprehensive examination  of its three then
current businesses in an  effort to identify strategic alternatives  to increase
stockholder value.  The company sold two of its business segments in 1997.

In March  1998, the Company announced an agreement to merge with MHD Acquisition
Corp.  The merger  is subject to stockholder approval, and  a special meeting of
stockholders is scheduled to be held in the second quarter of 1998.

Net sales  from continuing  operations  for the  year 1997  were $25,521,000,  a
decrease  of 6% from sales of $27,217,000 in 1996.  A significant sales increase
attributable to the traditional  belt conveyor product lines and  postal project
work was more  than offset by  lower sales in  recycling conveyors and  systems.
The market for  recycling equipment continues to  be weak due to low  prices for
recycled commodities.  Export sales represented 6% of total net sales.

Net income  from continuing operations for 1997 was $1,172,000 compared with net
income  of $3,583,000 for 1996.   During 1997, the Company  had an effective tax
rate of 37% compared with a significant tax benefit in 1996.  Gross margins were
higher in  1997 as  compared with  1996 despite lower  sales volume,  but higher
selling, general and administrative expense more than offset the improvement.

The costs of  products sold, exclusive of depreciation and amortization, was 57%
of net  sales  in 1997  compared with  63% in  1996.   The  improvement was  due
primarily  to  a change  in product  mix and  operating efficiencies.   Selling,
general and administrative expense of $7,935,000 in 1997 included a write off of
$427,000 for one large account receivable.  During 1996, the Company experienced
a  significant decrease  in insurance  expense due  to  an insurance  refund and
reduced claim activity.  Selling, general and administrative expense in 1996 was
$5,856,000.   Depreciation and amortization  increased $97,000 in  1997 compared
with 1996.    Amortization of  intangibles was  $229,000 in  1997 compared  with
$190,000 in 1996.

Interest  expense of  $635,000 was  down  19% for  the prior  year due  to lower
borrowings.  Borrowing rates  were up slightly due  to an increase in the  prime
interest rate.

During December  1997, the Company sold  substantially all of the  assets of its
Construction  Equipment and  Railroad Products segments.   As a  result of those
dispositions, cash and cash  equivalents increased $51,482,000 prior  to related
expenses and  taxes.  A portion  of these funds  was used to pay  down long-term
debt.   These segments  are treated as discontinued  operations in the Company's
Consolidated  Financial  Statements.   Major  fluctuations  in the  Consolidated
Balance Sheet  from December 31,  1996 to December  31, 1997  are the result  of
these transactions.   Certain assets  and liabilities of  the Company's  defined
benefit  plan  were transferred  to  the  buyers of  the  two  segments and  are
reflected in the financial statements as a curtailment and settlement.  Deferred
long-term  gains of  $1,315,000 associated  with the  defined benefit  plan were
retained  by  the Company.    The  increase  in income  taxes  payable  reflects
liability for the gain on  the sale of these  operations and the elimination  of
all remaining tax loss carryforward in 1996.

Capital expenditures for 1997 were $703,000 and $200,000 was paid as  part of an
earnout agreement on a prior acquisition.

Inflation, which was comparable to 1996, did not adversely affect the Company in
1997.

Bookings in 1997 of $28,903,000 were up 15% from the $25,201,000 booked in 1996.
The year-end order backlog of  $9,325,000 was 45% above the backlog  of December
31, 1996.

1996 COMPARED WITH 1995

Net sales for the year ended December 31, 1996, were $27,217,000, an increase of
$2,462,000 from the corresponding period of 1995.
Several new  products contributed to the  increase in sales.   Export sales were
down 72% to $911,000 as a result of less activity in Canada.

For  the year ended December 31, 1996,  the Company's net income from continuing
operations  was  $3,583,000 compared  with net  income  of $2,264,000  for 1995.
Higher sales volume  and greater  efficiency resulted in  this positive  change.
The  decrease in  other income  from $412,000  in 1995  to $50,000  in 1996  was
primarily due to  a gain of $250,000  recognized in 1995  on the sale of  assets
held  for  sale.   Depreciation  and  amortization  increased  $142,000 in  1996
compared with  1995.  Amortization of intangibles  was $190,000 in 1996 compared
with $153,000 in 1995.

At December  31, 1996, a net deferred  tax asset of $2,066,000  was reflected on
the balance sheet  after a reduction of  $3,133,000 in the valuation  allowance.
The  decrease in the valuation allowance  for 1996 resulted from the utilization
of tax loss carryforwards  and certain tax  credits, the reversing of  temporary
differences and  a reevaluation of future taxable income potential.  At December
31, 1995, the  valuation allowance  was decreased by  $977,000 for deferred  tax
assets realized through reversing temporary differences.

The decrease in current liabilities  was due to lower trade accounts  payable, a
reduction in customer deposits and a decrease in other accrued  expenses.  Long-
term debt as of December 31, 1996, was $10,768,000, an increase of $651,000 from
the  prior year.   These funds were  used primarily for  capital expenditures of
$784,000, for an  earnout provision  under an  acquisition agreement  and for  a
license agreement fee.

Inflation, which was comparable to 1995, did not adversely affect the Company in
1996 nor did the impact of foreign exchange adjustments.

Bookings  in 1996  of $25,201,000 were  down 3%  from the  $25,857,000 booked in
1995.  The year-end  order backlog of  $6,413,000 was 21%  below the backlog  of
December 31,  1995, due primarily to a decrease in demand for recycling conveyor
equipment in response to temporary, but significant declines in the market price
for recycled materials.

LIQUIDITY

On  February 12,  1993, the  Company entered  into a  credit agreement  with the
American  National Bank and Trust Company of  Chicago which was amended on April
26, 1994, June 13, 1995, and June 2, 1997.  The amended agreement provides up to
$17,000,000  of  credit available  as either  cash or  letters  of credit.   The
provisions of the  agreement include restrictive  covenants relating to  minimum
net  worth,   interest  coverage,  net   working  capital  and   leverage  ratio
requirements and limit cash dividend payments and additional indebtedness.

The Company does  not have available lines of credit  beyond its existing credit
agreement and is prohibited by the agreement from making other borrowings.

Management  believes  its  existing line  of  credit  and  anticipated operating
results  will provide  the Company  with sufficient  funds for  working capital,
capital  expenditures and acquisitions to support growth.  The Company's working
capital ratios were  4.2, 2.7 and 2.1 to 1 at  December 31, 1997, 1996 and 1995,
respectively.  At  December 31, 1997,  the Company had available  $14,749,000 of
unused  credit under  its  loan agreement,  plus  cash and  cash  equivalents of
$46,799,000 compared with $4,350,000 of unused credit and $4,979,000 of cash and
cash equivalents at December 31, 1996.

CAPITAL RESOURCES
The Company does  not have  any material commitments  for capital  expenditures.
Management estimates that  capital expenditures for  1998 will be  approximately
$1,100,000.

ENVIRONMENTAL
During 1997, the Company's manufacturing facilities were reviewed for compliance
with local and federal environmental regulations.  As a result of these reviews,
the  Company  initiated  the remedial  actions  necessary  to  comply with  such
regulations and these remedial actions have been completed.

Item 8.  Financial Statements And Supplementary Data.

   The response to this item is submitted under Item 14(a)(1) of the report.

Item  9.   Changes  In  And Disagreements  With  Accountants  On Accounting  and
Financial Disclosure.

   None.

                                    PART III

Item 10. Directors and Executive Officers Of The Company.

Executive Officers

   The following is a list of the Company's executive  officers, their ages, and
their positions and offices as of March 25, 1998:
<TABLE>
<S><C>

Name of                                           Age as of      Current Position with        Officer
Executive                                       March 25, 1998        The Company             Since

Albert Fried, Jr.                                   68           Chairman of the Board         1989

Michael T. Yonker                                   55           President and Chief           1988
                                                                 Executive Officer and Director

Nancy A. Kindl                                      56           Vice President,               1982
                                                                 Treasurer, Secretary,
                                                                 Controller and Chief
                                                                 Financial Officer

Kevin C. Rorke                                      49           Vice President,               1995
                                                                 Group Executive of
                                                                 Materials Handling Group

</TABLE>
   There are no family relationships among the officers.

   The  Company's officers are  chosen by  its Board of Directors.   Any officer
   elected or appointed  by the Board may be  removed with or without cause  at
   any time by the affirmative vote of the majority of the whole Board.

Business Experience

     Mr. Albert Fried, Jr. became  a member of the Company's Board  of Directors
in December 1988 and  the Company's Chairman of the  Board in October 1989.   He
has been a member of the Company's Nominating Committee since December 1989.  He
has been  the Managing  Member of  Albert Fried &  Company, New  York, New  York
(investment banking) for more than ten years  and also is the Managing Member of
Buttonwood  Specialists, LLC, New  York, New York,  specialists on  the New York
Stock Exchange.  He is a member of the New York Stock Exchange, Inc. and the New
York Futures Exchange.   He is  a director of  EMCOR Group, Inc.  and is also  a
director of various civic and philanthropic organizations.

     Mr. Michael T. Yonker  joined the Company as President and  Chief Executive
Officer in December  1988, and continues to serve the  Company in that capacity.
He became a  director in December 1989  and has been  a member of the  Company's
Nominating Committee since December 1989.  For the period of  October 1981 until
December 1988,  he was the Vice  President and Drive  Division Manager of  P. T.
Components, Inc.,  of Philadelphia, Pennsylvania (industrial  gear drives) which
was formed as  a private company in  October 1981.  He  is a director of  Modine
Manufacturing Company and Woodward Governor Company.

     Ms. Nancy A. Kindl was employed by the Company in August 1974, and has held
various  accounting, auditing,  tax  and  other  financial  positions  with  the
Company.  She left the  Company in December 1988  to take a position with  Amoco
Technology  Company as the Director of  Acquisition Projects and returned to the
Company in November  1989 to fill the position of  Vice President, Treasurer and
Controller.   She  also assumed the  positions of Secretary  and Chief Financial
Officer effective January 1, 1993.

     Mr. Kevin C. Rorke was employed by the Company in February 1987, as Manager
of  Project Management of the Automated Systems Division, became General Manager
of  the Automated  Systems Division  in  June 1988  and Group  Executive of  the
Materials Handling  Group  in November  1988.   In  June  1995, he  assumed  the
position of Vice President and Group  Executive of the Materials Handling Group.
For the period  1978 until February  1987, he  was Project Manager  of AGVS and
Towline Systems for FMC Corporation's Material Handling Systems Division.


Directors Of The Company

     The  Board of  Directors is  divided into  three classes  with the  term of
office  of one class expiring each year.   The terms of Messrs. Fried, White and
Yonker expire  in 1998;  the  term of  office of  Messrs.  Beadle, MacInnis  and
McSorley expire in 1999; and the terms of office of Messrs. Mancheski and McKeon
expire in 2000; or,  in each case until the election and  qualification of their
successors.  Information with respect to each director is as follows:

     Albert Fried, Jr.   Mr. Fried, age  68, became a director in  December 1988
and  the Company's  Chairman of  the Board  in October  1989.   He has  been the
Managing Member of  Albert Fried & Company, LLC, New  York, New York (investment
banking) for  more than ten years and also  is the Managing Member of Buttonwood
Specialists,  LLC, New  York, New York  (specialists on  the New  York Stock Ex-
change).  He is  a member of the New York Stock Exchange,  Inc. and the New York
Futures  Exchange, Inc.   He is a  director of EMCOR  Group, Inc. and  is also a
director of various civic and philanthropic organizations.

     L.  L. White, Jr.  Mr.  White, age 70, became a  director in November 1988.
He presently is  retired and was  employed by the  Company in various  executive
capacities from 1967 until  he retired as Senior Vice  President--Commercial and
Government Relations  in 1984.  Thereafter,  he was a private  investor until he
served  as the Company's Chairman of the  Board from December 1988 until October
1989 and as acting Chief Executive Officer in December 1988.
Michael T. Yonker  Mr. Yonker, age 55, became a director in December  1989.
He joined the Company as President and Chief Executive Officer in December 1988,
and  continues to serve in that capacity.   For the period of October 1981 until
December  1988, he  was the Vice  President and  Drive Division  Manager of P.T.
Components,  Inc. of Philadelphia, Pennsylvania (industrial gear drives).  He is
a director of Modine Manufacturing Company and Woodward Governor Company.

     J. Grant Beadle   Mr. Beadle, age 65, became a  director in April 1984.  He
retired in May 1991  from Union Special Corporation (manufacturer  of industrial
sewing  machines) after  thirty  years of  service and  was  Chairman and  Chief
Executive Officer of that Company from  December 1984 until his retirement.  For
the period of October 1991  until July 1993, he was an Associate Director of the
Institute  for the  Learning  Sciences at  Northwestern University  (educational
research).  He  is a director of Woodward Governor  Company, Batts, Inc., Oliver
Products Company, and William Blair Mutual Funds.

     Frank T.  MacInnis  Mr. MacInnis,  age 51, is Chairman  and Chief Executive
Officer of EMCOR Group,  Inc. (mechanical/electrical construction and facilities
management)  and has  held that position  with that Company  and its predecessor
company,  JWP, Inc.,  since 1994.   Prior  to this  he was Chairman  of Comstock
Group, Inc. (New York-based construction group)  and before that he was Chairman
and Chief  Executive  Officer of  H.C. Price  Construction (a  builder of  large
diameter oil  and gas pipelines).   He  is a director  of EMCOR Group,  Inc. and
MAPCO, Inc.

     Arthur McSorley,  Jr.   Mr. McSorley,  age 69, became  a director  in March
1977.   He was a director  and President of Casey  Co. (construction management)
and held those positions with that Company and its predecessor  company, John F.
Casey Company, for more than ten years.  He is retired.

     Frederick  J.  Mancheski   Mr.  Mancheski,  age  71, became  a  director in
September  1990.   He  retired  in February  1997  from  Echlin Inc.,  Branford,
Connecticut  (manufacturer of products that improve the efficiency and safety of
motor vehicles) as Chairman of the Board and Chief Executive Officer, a position
he had held since 1969.   He continues as a director  of Echlin Inc. as well  as
RB&W Corporation.

     John F. McKeon  Mr. McKeon, age 72, became a director in January 1987.   He
retired  in April 1989 as  President of LinkBelt  Construction Equipment Company
(construction equipment), a  company owned 51 percent by  FMC Corporation and 49
percent by Sumitomo Heavy Industries, Ltd., and held that position commencing in
1986.    He  also retired  in  April  1989  as a  Group  Vice  President  of FMC
Corporation  (construction equipment) and held  that position for  more than ten
years.  He is a director of LinkBelt Equipment Co.; LBS-Spa, an Italian company;
Dunmore Corp., and Anderson Industries.

Section 16(a) Beneficial Ownership Compliance

 Based solely upon review of reports on Form 3,4 and 5 and amendments thereto
filed pursuant to Section 16 of the Securities Exchange Act of 1934, as
amended, and written representations from certain directors and executive
officers that no Forms 5 were required to be filed by them, the Company
believes that during 1997 all filing requirements applicable to its directors,
executive officers and greater than ten percent benefical owners were complied
with, except that the following shares allocated under the Company's Savings
and Investment Plan for 1997 were reported on late-filed Forms 5 in February
1997 for the following individuals: Mr. Fried, 1,315 shares; Mr. Yonker, 608;
Ms. Kindl, 1,500 shares; and Mr.Rorke, 1,716 shares.


Item 11.  Executive Compensation.

     The following Summary  Compensation Table sets forth the total compensation
paid or  accrued by  the Company  and its subsidiaries  for the  three completed
years ended December 31, 1997, for each of the executive officers of the Company
whose salary and bonus exceeded $100,000 in 1997.

<TABLE>
<S><C>

                                            SUMMARY COMPENSATION TABLE


                                                                              Long-Term
                                                                             Compensation
                                               Annual Compensation              Awards
                                                                              Securities
                                                               Other          Underlying
                                                               Annual          Options/         All Other
        Name and                          Salary    Bonus   Compensation         SARs         Compensation
   Principal Position           Year       $(a)       $          $(b)          (Shares)            $(c)
   Michael T. Yonker            1997    $259,110   $192,288      -                   0           $ 3,280
President and Chief             1996     251,556     87,579      -              10,000             8,142
Executive Officer               1995     247,836          0      -              15,000             7,090

Albert Fried, Jr.               1997    $147,384   $ 45,810      -                   0           $ 8,140
Chairman of the                 1996     140,790     20,852      -              10,000            11,729
Board                           1995     139,020          0      -              15,000            11,950

Nancy A. Kindl                  1997    $131,651   $ 59,048      -                   0           $ 3,161
Vice President,                 1996     127,805     26,699      -               3,000             7,222
Secretary, Treasurer            1995     125,878          0      -               5,000             6,401
and Controller

Kevin C. Rorke                  1997    $144,152   $ 63,734      -                   0           $ 2,414
Vice President                  1996     137,282     41,184      -               3,000             6,555
and General Manager             1995     125,571     60,180      -               5,000             6,134
of the Flomaster
Division

John S. Cooper(d)               1997    $125,836   $ 79,896      -                   0           $ 2,891
Sr. Vice President              1996     129,684     14,395      -              12,000             8,703
and General Manager             1995     125,896     13,181      -               2,000             8,169
of the Railway
Maintenance
Products Division


(a) Includes amounts deferred under the Company's Savings and  Investment Plan and Directors Fees for Mr. Fried  as follows: 1997--
    $24,000, 1996--$21,000, 1995--$21,000.
(b) The dollar value of perquisites and other  personal benefits for each of the above  named executive officers was less than  the
    established SEC reporting threshold.
(c) The total  amounts shown in  this column for the  last fiscal  year consist of  the following: (i) Mr.  Yonker: $1,840--Company
    contribution  to the Savings and Investment Plan,  $1,440--Benefit attributed to Company  owned life insurance policy; (ii) Mr.
    Fried: $1,840--Company  contribution to  the Savings  and Investment  Plan, $6,300--Benefit  attributed to  Company owned  life
    insurance policy; (iii) Ms.  Kindl: $1,840--Company contribution to Savings and  Investment Plan, $1,321--Benefit attributed to
    Company owned life  insurance policy; (iv) Mr.  Rorke: $1,840--Company contribution to  the Saving and Investment  Plan, $574--
    Benefit  attributed to  Company owned  life insurance policy;  and Mr.  Cooper: $815--Company  contribution to  the Savings and
    Investment Plan, $2,016--Benefit attributed to Company owned life insurance policy.
(d) Mr. Cooper terminated his employment with the Company in December 1997.

Options

    There were  no options  granted to any  employees (including the  individuals named in  the Summary Compensation  Table) during
1997.

  The following  table shows  for the  individuals named in  the Summary  Compensation Table  information with  respect to  options
  exercised during 1997 and the value of unexercised options at December 31, 1997.

                                             AGGREGATED OPTIONS EXERCISED DURING 1997
                                             AND VALUE OF OPTIONS AT DECEMBER 31, 1997


                                                          Number of Securities           Value of Exercised
                                                         Underlying Unexercised             In-The-Money
                          Shares                               Options at                      Options
                         Acquired        Value             December 31, 1997            at December 31, 1997
     Name               on Exercise   Realized (a)      Exercisable/Unexercisable    Exercisable/Unexercisable(b)

Michael T. Yonker           6,500       $ 69,129               138,550/5,000                  $1,349,770/0
Albert Fried, Jr.          21,600       $217,572               165,980/5,000                  $1,663,787/0
Nancy A. Kindl                --            --                  31,414/1,666                    $257,259/0
Kevin C. Rorke                --            --                  25,870/1,666                    $187,760/0
John S. Cooper              3,025        $18,516                13,830/6,000                     $57,097/0

(a) Based on  the closing  price of  the Common  Stock on  the Composite  Tape on  the date the  options were  exercised, less  the
    applicable exercise price.
(b) Based on the closing price of the Common Stock on December 31, 1997, less the applicable exercise price.
</TABLE>

Executive Officer Agreements

  Mr. Yonker,  President and  Chief Executive  Officer of  the Company,  entered
into  an agreement  with the  Company in  December 1988,  which was  amended and
restated  in February 1989 and further amended  in December 1989, July 1997, and
February 1998,  that sets forth  the terms of  his employment with  the Company.
His current  annual compensation  rate is  $262,944 and  he participates in  the
employee  benefit plans  as  generally provided  to  executive officers  of  the
Company.   He has agreed  not to voluntarily  terminate his employment  with the
Company  without  giving 60  days  prior written  notice.    The agreement  also
provides termination benefits if his employment terminates (for any reason other
than death, disability,  or certain specified causes) after a "change of control
event" whereby the Company is  acquired or 22 percent of its  outstanding Common
Stock is acquired by  a party who does not obtain the  approval of the Company's
Board of Directors prior to the transaction and prior to acquiring as much as 17
percent of  the Company's Common  Stock.   The agreement provides  that the  "22
percent"  figure is changed to "27 percent"  as applicable to the acquisition of
voting  securities  of  the  Company  by  Albert  Fried  &  Company,  The  Fried
Foundation, and Albert  Fried, Jr. (collectively called "Mr. Fried").   An event
also includes the situation when during any period of 24  consecutive months the
individuals who  at the beginning of  such period constitute the  members of the
Board of  Directors of the Company, plus  all other members of  such Board whose
election  or appointment to such Board or  nomination for election to such Board
was approved by  the vote of at least a majority  of the directors then still in
office who either  were directors of the Company at the  beginning of the period
or whose election or appointment or nomination for such  election was previously
so approved,  cease for any  reason to  constitute at  least 75  percent of  the
members  of  such  Board.   If  Mr.  Yonker  elects  to  exercise  his right  of
termination  of his  employment because of  an event,  this must  be done within
ninety (90) days  following the event.  If the  Company terminates the agreement
for reasons other than good cause or Mr. Yonker terminates the agreement because
of the Company's breach or an event, for  a period of two years from the date of
such  termination or  until  his death,  whichever  is the  shorter  period, the
Company shall (i)  pay to him, in  monthly installments, a cash  amount equal to
his  monthly  salary from  the  Company  in  effect  immediately prior  to  such
termination, and (ii)  provide him  with health, disability  and life  insurance
coverage in amounts substantially equal to those he was receiving at the time of
termination.  In the event his employment is terminated as a result of an event,
Mr. Yonker may elect to receive a lump sum  cash settlement of the cash payments
due.

  Ms.  Kindl, Vice  President, Treasurer and  Secretary of  the Company, entered
into  an  agreement with  the Company  in November  1989,  which was  amended in
December 1990 and July 1997, and sets forth the terms of her employment with the
Company.  Her  current annual compensation rate is $133,104 and she participates
in the employee benefit plans as generally provided to executive officers of the
Company.   Ms  Kindl's  agreement includes  substantially  the same  "change  in
control"  provisions as described above with  respect to Mr. Yonker, except that
the  figure  "22 percent"  referred  to  in said  paragraph  is  changed to  "20
percent",  and the "20 percent" figure is  changed to "27 percent" as applicable
to the acquisition  of voting securities of  the Company by  Mr. Fried.  If  she
elects to  exercise her right  of termination  of her employment  because of  an
event, this must be done  within ninety (90) days  following the event.  In  the
event of  a termination of the  agreement by the Company for  reasons other than
good cause or Ms. Kindl terminates the agreement because of the Company's breach
or an event, for a period of one year from the date of such termination or until
her death, whichever is the shorter period, the Company shall (i) pay to her, in
monthly installments, a cash amount equal to her monthly salary from the Company
in  effect immediately  prior  to such  termination, and  (ii) provide  her with
health, disability and life insurance coverage in amounts substantially equal to
those she was receiving at the time of termination.  In the event her employment
is terminated as a result of an event, Ms. Kindl may elect to receive a lump sum
cash settlement of the cash payments due.
<PAGE>
PENSION PLANS

  Substantially all  of the Company's  employees, including executive  officers,
are  participants  in  the Company's  Employees'  Retirement  Program.     Also,
officers   and  certain  other  managerial  employees  of  the  Company  may  be
participants in the Company's Supplemental Non-Qualified Retirement Income Plan.
Gross wages used in calculating pension benefits under the two  plans are capped
at $350,000.

  The  following table  shows the  estimated  annual  pension benefits  from the
above program and plan based on a straight life annuity that  a participant will
receive if he or she retires at age 65, the normal retirement age:

<TABLE>
<S><C>
                                 PENSION PLAN TABLE

  HIGHEST CONSECUTIVE
   FIVE-YEAR AVERAGE
    EARNINGS DURING
        FINAL                                                    YEARS OF CREDITED SERVICE
  10 YEARS OF SERVICE         5            10          15         20           25          30          35

    $100,000                $ 8,248      $16,496     $24,743    $ 32,991     $ 41,239    $ 49,487    $ 57,735
     150,000                 12,748       25,496      38,243      50,991       63,739      76,487      89,235
     200,000                 17,248       34,496      51,743      68,991       86,239     103,487     120,735
     250,000                 21,748       43,496      65,243      86,991      108,739     130,487     152,235
     300,000                 26,248       52,496      78,743     104,991      131,239     157,487     183,735
     350,000                 30,748       61,496      92,243     122,991      153,739     184,487     215,235
</TABLE>

   For purposes of this program  and plan, "earnings" means the amounts  paid to
the employee by the Company as reported  to the Internal Revenue Service on Form
W-2 plus  the amount of  compensation deferred by  the employee pursuant  to the
Company's  benefit plans.   Earnings  for the  individuals who  are participants
under this  program and plan and  named in the above  Summary Compensation Table
are included in the amounts set forth in said table.

   At December 31, 1997, the individuals named in the Summary Compensation Table
had the indicated years of credited service under the aforementioned program and
plan:   Mr. Yonker--9 years,  Mr. Fried--8.2 years,  Ms. Kindl--22.8  years, Mr.
Cooper--18.4 years, and Mr. Rorke--10.9 years.

   Pension benefits as above described  are for the employee's life and  are not
subject to any  reduction for Social Security benefits or  other offset amounts.
The  Internal Revenue Code  places certain limitations on  pensions which may be
paid under the  Employees' Retirement  Program as qualified  under the  Internal
Revenue Code.

DIRECTOR'S COMPENSATION

   Directors of the Company, other than Mr. Yonker,  are paid quarterly retainer
fees and fees  for attendance at Board  and Board committee meetings.   The 1997
quarterly  retainer, Board  meeting and committee  meeting attendance  fees were
$3,500, $1,000, and $1,000, respectively.  Additionally, the Chairman of each of
the  Audit,  Nominating,  and  Stock   Option  and  Compensation  Committees  is
compensated at the annual rate of $2,600.

   In addition to the foregoing cash compensation, each non-employee director is
granted a  stock option to purchase 7,000 shares of  Common Stock of the Company
upon  election to the Board.  Additionally, each  year at the time of the Annual
Meeting each non-employee director  is granted a stock option to  purchase 2,000
shares of  Common Stock of the Company.  The  option exercise prices of all such
stock  options are set  in accordance with  the Company's 1988  Employees' Stock
Benefit Plan.  The  exercise price of all options  granted must be equal  to the
fair market value of the stock on the grant date.

Item 12.  Security Ownership Of Certain Beneficial Owners And Management.




                                  STOCK OWNERSHIP
<TABLE>
<S><C>

 The following table contains  information relative to persons known to  the management of the Company to  be beneficial owners
of more than five percent of the Company's Common Stock.

         NAME AND ADDRESS OF                                       AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(A)
           BENEFICIAL OWNER                                                  NUMBER                PERCENTAGE

Albert Fried, Jr. and Albert Fried & Company, LLC                            1,191,308(b)              25.8%
40 Exchange Place
New York, New York 10005

Gabelli Funds, Inc.                                                            946,390(c)              21.3%
One Corporate Center
Rye, New York  10580-1434

Heartland Advisors, Inc.                                                       339,300(d)              7.6%
790 North Milwaukee Street
Milwaukee, Wisconsin  53202

The TCW Group, Inc.                                                            341,829(e)              7.0%
865 South Figueroa Street
Los Angeles, California  90017

Dimensional Fund Advisors, Inc.                                                270,496(f)              6.1%
11th Floor
1299 Ocean Avenue
Santa Monica, California  90401


(a)  The figures shown are  as of February 28, 1998,  except as otherwise indicated below.   The information relating to  directors
     and officers of  the Company  and other persons  in this  Section is based  on information  furnished to the  Company by  such
     persons and SEC reports.

(b)  Included in these shares  are 170,980 shares related  to stock options granted  to Mr. Fried  which are exercisable within  60
     days of February 28 1998, and 9,550 shares  held for his account by the Company's Savings and Investment Plan.  Albert Fried &
     Company, LLC,  of which Mr.  Fried is a  managing member, has sole  voting and dispositive  power with regard  to 1,010,778 of
     these shares.

(c)  Gabelli Funds, Inc. has sole voting  and dispositive power with regard to these shares.  Figures presented  are as of March 2,
     1998.

(d)  Heartland Advisors, Inc.  has sole dispositive  power with regard to  these shares and  sole voting power  with regard to  all
     shares.

(e)  The TCW Group, Inc. has sole voting and dispositive power with regard to these shares.

(f)  Dimensional  Fund Advisors Inc. ("Dimensional"),  a registered investment  advisor, is deemed to  have beneficial ownership of
     270,496 shares of  PORTEC, Inc. stock as of  December 31, 1997, all of  which shares are held in portfolios  of DFA Investment
     Dimensions Group  Inc., a registered open-end investment company, or in series of the DFA Investment Trust Company, a Delaware
     business trust, or the DFA Group  Trust and DFA Participation Group Trust, investment vehicles  for qualified employee benefit
     plans, all of which Dimensional  Fund Advisors Inc. serves as investment manager.   Dimensional disclaims beneficial ownership
     of all such shares.

     The following table contains information,  as of February 28,  1998, relative to each  director, Mr. Cooper (whose  employment
with Company  terminated in  December 1997),  and the  two non-director  executive officers  of the  Company named  in the  Summary
Compensation Table shown on Page 15, and  all directors and executive officers as  a group as to their beneficial ownership  of the
Company's Common Stock.

 NAME OF INDIVIDUAL
 OR NUMBER OF                                                 AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(A)
PERSONS IN GROUP                                                           NUMBER              PERCENTAGE

 J.Grant Beadle                                                            17,560(c)                   (b)
 Frank T. MacInnis                                                          9,000(c)                   (b)
 Frederick J. Mancheski                                                    26,805(c)                   (b)
 John F. McKeon                                                            20,421(c)                   (b)
 Arthur McSorley, Jr.                                                      17,702(c)                   (b)
 L. L. White, Jr.                                                          61,022(d)                    1.4%
 Albert Fried, Jr.                                                      1,191,308(c)(e)                25.8%
 Michael T. Yonker                                                        169,191(c)(e)                 3.7%
 Nancy A. Kindl                                                            45,551(c)(e)                 1.0%
 Kevin C. Rorke                                                            34,287(c)(e)                   (b)
 John S. Cooper                                                            27,194(c)(e)                   (b)
All Directors and Executive Officers as a Group                         1,620,041(f)                   32.8%


(a)  All beneficial ownership is direct and arises from sole voting and dispositive power, except as otherwise indicated below.

(b)  Less than one percent.

(c)  Included in the shares listed are the  following shares related to stock options which are exercisable within 60 days of March
     11, 1998; Mr. Beadle, 14,100 shares; Mr. MacInnis,  9,000 shares; Mr. Mancheski, 14,100 shares; Mr. McKeon, 14,100 shares; Mr.
     McSorley, 14,100  shares; Mr. White, 14,100 shares; Mr. Fried, 170,980  shares; Mr. Yonker, 143,550 shares; Mr. Cooper, 16,830
     shares;  Ms. Kindl, 33,080  shares; Mr. Rorke,  27,536 shares; and  all directors and  exeuctive officers as  a group, 391,976
     shares.

(d)  Mr.  White has sole  voting and dispositive  power with respect  to 46,069 of  these shares and  his wife has  sole voting and
     dispositive power with respect to 853 of these shares.

(e)  Included in  the shares listed are  the following shares  held for the officers'  accounts by Portec's  Savings and Investment
     Plan: Mr.  Yonker, 6,141 shares; Mr. Fried, 9,550 shares; Mr.  Cooper (whose employment with  Portec terminated in December
     1997 upon the sale  of the Railroad  Products business),  7,364 shares;  Ms.  Kindl, 11,195  shares;  Mr. Rorke,  4,001 shares;
     and  all directors  and executive officers as a group, 38,251 shares.
(f)  Included in these  shares for all  directors and executive  officers as a  group are 454,646  shares covered by  stock options
     which  are exercisable within 60 days of February 28, 1998.  Also, 38,251 shares are held for the accounts of officers by the
     Company's Savings and Investment Plan.

</TABLE>
Item 13.  Certain Relationships and Related Transactions.

None.


                                     PART IV



Item 14.  Exhibits, Financial Statement Schedules And Reports On Form 8-K.

(a)(1) and (2)   The following consolidated financial statements of the Company
are included on pages 26 to 43.

o Report of Independent Accountants

o Consolidated Statements of Income for the Years Ended  December 31, 1997, 1996
  and 1995

o Consolidated Balance Sheet at December 31, 1997 and 1996

o Consolidated Statements of Cash Flows or the Years Ended December  31, 1997,
  1996 and 1995

o Notes to Consolidated Financial Statements (including Unaudited     Quarterly
  Financial Information)

o Schedule II -   Valuation and Qualifying Accounts and Reserves for years ended
  December 31, 1997, 1996 and 1995

  All  other schedules  are omitted,  because  they are  not  applicable or  the
required information is shown in the financial statements or notes thereto.

(3) The exhibits filed with this Form 10-K are listed in the Exhibit Index.  All
management  contracts and compensatory plans  or arrangements set  forth in such
list are marked with an (x).


(b) Reports on Form 8-K:

The Company filed one (1)  Form 8-K Report during  the last quarter of 1997  and
one (1) Form 8-K Report during the first quarter of 1998.

(1) The Company  issued a Form 8-K Report dated  December 12, 1997, covering the
disposition of the assets  of its Construction Equipment and  Railroad Products
segments.

(2) The Company issued a  Form 8-K Report dated March 11,  1998, announcing that
it had entered into an Agreement and Plan of  Merger with MHD Acquisition Corp.,
an affiliate of J Richard Industries, L. P.










                                   SIGNATURES


  Pursuant to  the  requirements of  Section  13 or  15  (d) of  the  Securities
Exchange of 1934, PORTEC,  Inc. has duly caused this report to  be signed on its
behalf by the undersigned, thereunto duly authorized.


                                   PORTEC, Inc.

                                   By: /S/ Michael T. Yonker
                                        Michael T. Yonker
                                        President and Chief
                                        Executive Officer and
                                        Director


                                   By: /S/ Nancy A. Kindl
                                        Nancy A. Kindl
                                        Vice President -
                                        Finance, Treasurer,
                                        Controller, and Secretary
                                       (Chief Financial and
                                        Accounting Officer)








March 26, 1998





Pursuant to the requirements of the Securities Exchange Act of 1934, this report
on Form 10-K has been signed below by the following persons on behalf of PORTEC,
Inc. and in the capacities and on the dates indicated:

Signature                   Title                 Date


/S/ Michael T. Yonker       President and         March 26, 1998
Michael T. Yonker           Chief Executive Officer & Director


/S/ Nancy A. Kindl          Vice President,       March 26,  1998
Nancy A. Kindl              Finance, Treasurer
                            Controller and Secretary
                            (Chief Financial and Accounting Officer)


/S/ Albert Fried, Jr.       Chairman              March  26, 1998
Albert Fried, Jr.           of the Board


/S/ J. Grant Beadle         Director              March 26, 1998              J.
Grant Beadle


/S/ Frank T. MacInnis       Director              March 26,  1998
Frank T. MacInnis


/S/ Frederick J. Mancheski  Director              March 26,  1998
Frederick J. Mancheski


/S/ John F. McKeon          Director              March 26, 1998
John F. McKeon


/S/ Arthur McSorley, Jr.    Director              March 26,  1998
Arthur McSorley, Jr.


/S/ Michael T. Yonker       Director              March  26, 1998
Michael T. Yonker


/S/ L. L. White, Jr.        Director              March 26, 1998              L.
L. White, Jr.







                              REPORT OF INDEPENDENT ACCOUNTANTS


To The Board of Directors
of PORTEC, Inc.

   In our  opinion, the consolidated  financial statements listed  in the  index
appearing under Item 14(a) (1) and (2) on page  22 present fairly, in all
material respects, the financial  position of PORTEC,  Inc. and
its subsidaries at December 31, 1997, and  1996, and the results of their
operations and their cash flows  for each  of the three  years in the  period
ended December  31, 1997, in
conformity  with  generally accepted  accounting  principles.   These  financial
statements   are   the  responsibility   of   the   Company's  management:   our
responsibility is to express an  opinion on these financial statements based  on
our audits.   We conducted  our audits  of these statements  in accordance  with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable  assurance about whether the financial statements are
free of  material misstatement.  An  audit includes examining, on  a test basis,
evidence  supporting the  amounts and disclosures  in the  financial statements,
assessing  the accounting  principles  used and  significant  estimates made  by
management, and  evaluating the  overall financial  statement presentation.   We
believe  that our  audits provide a  reasonable basis for  the opinion expressed
above.





Price Waterhouse LLP



Chicago, Illinois
March 11, 1998

<TABLE>
<S><C>
CONSOLIDATED STATEMENTS OF INCOME
    For the Years Ended December 31


(Dollars in thousands except per share data)                                        1997         1996        1995

REVENUES
   Net sales  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 25,521     $ 27,217    $ 24,755
   Interest income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         273           80          43
   Other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . .         (39)          50         412
     Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      25,755       27,347      25,210

COSTS AND EXPENSES
   Cost of products sold (exclusive of depreciation
     and amortization)  . . . . . . . . . . . . . . . . . . . . . . . . . . .      14,631       17,110      15,784
   Selling, general and administrative  . . . . . . . . . . . . . . . . . . .       7,935        5,856       5,716
   Depreciation and amortization  . . . . . . . . . . . . . . . . . . . . . .         703          606         464
   Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         635          788         805
     Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      23,904       24,360      22,769

   Income from continuing operations before provisions for income tax . . . .       1,851        2,987       2,441
   Income tax (benefit)provision . . . . . . . . . . . . . . . . . . . . .  .         679         (596)        177
   Income from continuing operations  . . . . . . . . . . . . . . . . . . . .       1,172        3,583       2,264
DISCONTINUED OPERATIONS
   Income from discontinued operations, net of taxes  . . . . . . . . . . . .       2,866        3,308         634
   Gain on disposal of discontinued operations, net of taxes  . . . . . . . .      11,263            -           -
   Income from discontinued operations  . . . . . . . . . . . . . . . . . . .      14,129        3,308         634

NET INCOME  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 15,301     $  6,891    $  2,898


EARNINGS PER SHARE
BASIC
   Income from continuing operations  . . . . . . . . . . . . . . . . . . . .    $    .27     $    .83    $    .53
   Income from discontinued operations  . . . . . . . . . . . . . . . . . . .        3.23          .76         .15
   Net Income   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $   3.50     $   1.59    $    .68
   Weighted average shares outstanding  . . . . . . . . . . . . . . . . . . .   4,376,963    4,329,761   4,296,466

DILUTED
   Income from continuing operations  . . . . . . . . . . . . . . . . . . . .    $    .26     $    .78    $    .49
   Income from discontinued operations  . . . . . . . . . . . . . . . . . . .        3.11          .72         .14
   Net Income   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $   3.37     $   1.50    $    .63
   Weighted average shares outstanding  . . . . . . . . . . . . . . . . . . .   4,539,301    4,576,358   4,596,469

The accompanying notes are an integral part of these financial statements.

CONSOLIDATED BALANCE SHEETS
    December 31

(Dollars in thousands)                                                                          1997         1996
ASSETS
CURRENT ASSETS
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 46,799    $  4,979
  Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        6,070      14,816
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,488      18,038
  Other current assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          280         981
  Deferred income tax benefits  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          745       3,286
    Total current assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       57,382      42,100
PROPERTY, PLANT AND EQUIPMENT
  Land  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           43         220
  Buildings and improvements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,997      10,964
  Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4,737      23,010
                                                                                                 7,777      34,194
  Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (3,859)    (19,651)
    Total property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . .        3,918      14,543
ASSETS HELD FOR SALE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            -       2,070
INTANGIBLE ASSETS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,673       4,922
NOTES RECEIVABLE AND OTHER ASSETS   . . . . . . . . . . . . . . . . . . . . . . . . . . .          303       2,583
DEFERRED INCOME TAX BENEFIT   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          182          -
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 64,458    $ 66,218

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . .     $  2,300    $     46
  Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,335       7,015
  Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        5,132       9,077
  Income taxes payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4,913         249
    Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       13,680      16,387
LONG-TERM DEBT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            -      10,768
OTHER LONG-TERM LIABILITIES
  Pensions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,060       1,868
  Deferred income tax   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            -       1,365
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          202         844
    Total other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .        1,262       4,077
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 13)
STOCKHOLDERS' EQUITY
  Common stock, $1 par value; authorized - 10,000,000
     shares; issued - 4,428,108 and 4,373,596 shares, respectively  . . . . . . . . . . .        4,428       4,374
  Additional capital  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       47,260      46,841
  Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . .            -         (99)
  Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (2,070)    (15,968)
                                                                                                49,618      35,148
  Treasury stock, 9,544 and 16,421 shares, respectively, at cost  . . . . . . . . . . . .         (102)       (162)
    Total stockholders' equity  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       49,516      34,986
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 64,458    $ 66,218

The accompanying notes are an integral part of these financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Years Ended December 31
<PAGE>
(Dollars in thousands)                        1997         1996        1995

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 15,301     $  6,891    $  2,898
  Income from discontinued operations   . . . . . . . . . . . . . . . . . .        14,129        3,308         634
  Income from continuing operations   . . . . . . . . . . . . . . . . . . . .       1,172        3,583       2,264
  Adjustments to reconcile net income from continuing operations
    to net cash provided (used) by operating activities:
      Depreciation and amortization . . . . . . . . . . . . . . . . . . . . .         703          589         454
      Deferred income taxes   . . . . . . . . . . . . . . . . . . . . . . . .       1,139       (1,346)         48
      Changes in other balance sheet accounts:
        Increase in receivables   . . . . . . . . . . . . . . . . . . . . . .        (254)        (131)       (632)
        Increase in inventories   . . . . . . . . . . . . . . . . . . . . . .        (636)        (253)     (1,291)
        Decrease (increase) in other current assets . . . . . . . . . . . . .         170           83         (33)
        Increase (decrease)in accounts payable and accruals   . . . . . . . .       4,428       (3,124)      1,684
        Decrease (increase) in other assets net of other liabilities  . . . .         339         (203)         87
          Net cash provided (used) by operating activities of continuing operations 7,061         (802)      2,581

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisitions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (200)        (800)       (400)
  Capital expenditures  . . . . . . . . . . . . . . . . . . . . . . . . . . .        (703)        (784)     (1,653)
      Net cash provided (used) by investing activities of continuing operations      (903)      (1,584)     (2,053)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from (repayment of) revolving credit agreement   . . . . . . . . .      (8,700)         700       4,832
  Principal payments of term debt   . . . . . . . . . . . . . . . . . . . . .           -            -      (3,591)
  Proceeds from other long-term debt  . . . . . . . . . . . . . . . . . . . .           -          300          -
  Issuance of common stock  . . . . . . . . . . . . . . . . . . . . . . . . .         279          233         181
  Purchase of treasury stock  . . . . . . . . . . . . . . . . . . . . . . . .        (371)        (241)       (486)
  Cash dividends paid   . . . . . . . . . . . . . . . . . . . . . . . . . . .      (1,403)        (350)          -
     Net cash provided (used) by financing activities of continuing operations    (10,195)         642         936

CASH FROM DISCONTINUED OPERATIONS, INCLUDING DESPOSITIONS . . . . . . . . . .      45,857        3,246      (1,385)
NET INCREASE IN CASH AND CASH EQUIVALENTS                         . . . . . .      41,820        1,502          79
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR  . . . . . . . . . . . . . . .       4,979        3,477       3,398
CASH AND CASH EQUIVALENTS AT END OF YEAR  . . . . . . . . . . . . . . . . . .    $ 46,799     $  4,979    $  3,477
SUPPLEMENTAL DISCLOSURES:
  Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $    654     $    770    $    789
  Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       1,373          631         431

The accompanying notes are an integral part of these financial statements.
</TABLE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES

Portec, Inc.  is a  leading manufacturer  of quality  engineered products.   The
Company's principal line  of business is  the production  and sale of  materials
handling equipment.   The principal  market for such products  is North America.
(See Note 2 regarding discontinued operations.)

The preparation  of financial statements  in conformity with  generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the reported  amounts  of  assets  and  liabilities  and  disclosure  of
contingent assets and  liabilities at the  date of the financial  statements and
the  reported  amounts of  revenues and  expenses  during the  reporting period.
Actual results could  differ from those estimates.   Certain prior  year amounts
have been reclassified to conform to the current year presentation.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements  include the accounts of Portec,  Inc. and
all  of its subsidiaries.   All material intercompany  transactions and balances
have been eliminated in consolidation.

CASH EQUIVALENTS
Short-term and highly liquid investments with a an original maturity of three
months or less at the date of purchase are considered to be cash equivalents.

ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK
The Company does not  require collateral for most of its  credit sales which are
typically due  within 30 days.  Sales to one  customer accounted for
approximately 25% of revenues during 1997.

INVENTORIES
Inventories are  stated at the lower of  cost or market.   Cost is determined on
the last-in, first-out (LIFO) method for all inventories.

PROPERTY, PLANT AND EQUIPMENT
Depreciation  is computed  using  the straight-line  method  over the  estimated
useful lives of the assets,  ranging generally from 10 to 25 years for buildings
and from 5 to 18 years for machinery and equipment.  Maintenance, repairs, minor
renewals and betterments are charged to expense as incurred;  major renewals and
betterments are capitalized.   The cost and related accumulated  depreciation of
assets  replaced, retired  or  otherwise disposed  of  are eliminated  from  the
property accounts, and any gain or loss is reflected in income.  If the carrying
value  of an  asset,  including  associated  intangibles,  exceeds  the  sum  of
estimated  undiscounted future cash flows, then an impairment loss is recognized
for the difference between estimated fair value and carrying value.

INTANGIBLE ASSETS
Goodwill in  the amount of  $2,131,000 at December  31, 1997, and  $3,631,000 at
December 31,  1996, is amortized on a straight-line basis over fifteen years and
is recorded  net of accumulated  amortization of $602,000 and  $543,000 for 1997
and 1996, respectively.   Costs of patents and  license agreements are amortized
on a  straight-line basis over the shorter of the legal or estimated useful life
of  the  asset.    Amortization  expense  on  intangible  assets  of  continuing
operations was $229,000 for 1997, $190,000 for 1996 and $153,000 for 1995.

RESEARCH EXPENDITURES
Expenditures for research  and development  are charged to  expense as  incurred
and,  for continuing  operations, amounted  to approximately  $57,000 for  1997,
$110,000 for 1996 and $45,000 for 1995.


EARNINGS PER SHARE
During 1997,  the Company  adopted  FAS No.  128,  "Earnings per  share,"  which
requires  the  presentation of  basic and  diluted  earnings per  share.   Basic
earnings  per share excludes dilution and is  computed by dividing income by the
weighted  average number  of  common  shares  outstanding  during  each  period.
Diluted earnings  per share reflects the potential  dilution that could occur if
common stock options  are exercised and  is computed by  dividing income by  the
weighted average  number of common  shares outstanding,  including common  stock
equivalent shares, issuable upon  exercise of outstanding stock options,  to the
extent that they would have a dilutive effect on the per share amounts.

The potential dilutive effect of the Company's  stock  options for the periods
presented  is  as follows:  162,338 shares in 1997; 246,597 shares  in 1996;
and 300,003 shares in 1995.

Options  to purchase  29,700 shares  of common  stock at  $14.77 per  share were
outstanding during the entire period but were not included in the computation of
diluted  earnings per share because  the option exercise  price was greater than
the average market  price of the common shares.   The options expire  on October
25, 2005.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The   carrying  amounts  of  cash  and  cash  equivalents,  accounts  and  notes
receivable, accounts  payable and borrowings  approximated their fair  values at
December 31, 1997, and 1996, because of the short maturity  of those instruments
or their insignificance.
<PAGE>
NOTE 2.  DISCONTINUED OPERATIONS

On December  3, 1997, the  Company announced that  it had completed the  sale of
substantially all of  the assets of its Construction Equipment  segment for cash
and the assumption of all significant related  liabilities.  The Company further
announced on December 11, 1997, that all of the assets of the  Railroad Products
segment were sold for  cash and the  assumption of all significant  liabilities.
Proceeds  from  the  sale  of  the  assets  of  the  two  segments  amounted  to
$51,482,000.  The gain  on the sale of these segments was  $11,263,000 after tax
expense of $6,124,000.  Revenues from  the discontinued operations in 1997, 1996
and  1995, were  $71,607,000,  $70,121,000 and  $72,317,000, respectively.   The
Consolidated Statements of Income  and the Consolidated Statements of  Cash Flow
have  been restated to include  the Company's former  Construction Equipment and
Railroad Products segments as discontinued operations.  Significant fluctuations
in Consolidated Balance Sheet data, unless  otherwise addressed, were due to the
disposal of the above two segments.

NOTE 3.  ACCOUNTS AND NOTES RECEIVABLE

The components of accounts and notes  receivable at December 31, 1997, and 1996,
were as follows:

<TABLE>
<S><C>

(Dollars in thousands)                                                                      1997            1996

Trade receivables net of allowance for doubtful
  accounts of $0 and $357, respectively   . . . . . . . . . . . . . . . . . . . .        $   4,088      $   14,724
Other current receivables   . . . . . . . . . . . . . . . . . . . . . . . . . . .            1,982               -
Current portion of notes receivable   . . . . . . . . . . . . . . . . . . . . . .                -              92
   Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $   6,070      $   14,816


Other current  receivables totalling $1,733,000 for  1997 relate to the  sale of
the discontinued operations.

Notes receivable  and other assets include notes receivable totalling $1,076,000
for 1996 related to the sale of property in Minneapolis, Minnesota.  These notes
receivable were sold as part of the discontinued operations.

NOTE 4.  INVENTORIES

The difference between LIFO value  and approximate replacement cost of  the LIFO
inventories  was $685,000  and  $7,927,000  at  December  31,  1997,  and  1996,
respectively.

The components of inventories at December 31, 1997, and 1996, were as follows:

(Dollars in thousands)                                                                      1997           1996

Raw material and supplies   . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $    1,648     $    6,361
Work-in-process   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,288          3,468
Finished goods  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             552          8,209
   Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $    3,488     $   18,038


NOTE 5.  INCOME TAXES

Pre-tax income  from continuing operations  of $1,851,000,  $2,987,000 and $2,441,000  for 1997, 1996  and 1995,  respectively, was
taxed under domestic jurisdictions.

The provision for income taxes charged to continuing operations was as follows:

(Dollars in thousands)                                                        1997            1996           1995

Current expense:
  Federal   . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $   1,752      $      709     $      122
  State   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              66              41              7
      Total Current   . . . . . . . . . . . . . . . . . . . . . . . .         1,818             750            129

Deferred tax expense (benefit):
  Federal   . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (1,108)         (1,339)             -
  State   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (31)             (7)            48
    Total Deferred  . . . . . . . . . . . . . . . . . . . . . . . .          (1,139)         (1,346)            48

Total provision (benefit)   . . . . . . . . . . . . . . . . . . . .       $     679      $     (596)    $      177


The  total income tax provision  (benefit) for discontinued operations was  $6,749,000, $657,000 and $(163,000)  for 1997, 1996 and
1995, respectively.



Deferred income taxes represent  the tax effect, at current  statutory rates, of temporary differences  in the bases of assets  and
liabilities for financial reporting and  income tax purposes.   Deferred tax liabilities (assets)  at December 31, 1997, and  1996,
include the following:

(Dollars in thousands)                                                                      1997            1996

Depreciation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $      272     $    1,760
Plant closing costs   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               -            983
  Gross deferred tax liabilities  . . . . . . . . . . . . . . . . . . . . . . . . .             272          2,743

Accrued liabilities   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (308)          (946)
Inventory   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (51)          (801)
Employee benefits   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (463)          (794)
Product liability and warranty  . . . . . . . . . . . . . . . . . . . . . . . . . .            (377)          (854)
Tax credit carryforwards  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               -           (937)
Other   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               -           (477)
  Gross deferred tax assets   . . . . . . . . . . . . . . . . . . . . . . . . . . .          (1,199)        (4,809)
Net deferred tax assets   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (927)        (2,066)


In determining the amount of any  valuation allowance required to offset deferred  tax assets, the Company assesses the  likelihood
of  realizing those assets  based on  anticipated future taxable  income.   Management determined  that no valuation  allowance was
necessary as of December 31, 1997, and 1996.

The difference  between the statutory federal income  tax rate and the effective  income tax rate for  continuing operations was as
follows:

                                                                            1997            1996           1995

Statutory federal income tax rate   . . . . . . . . . . . . . . . .         34.0%           34.0%          34.0%
Difference resulting from:
  Realization of deferred tax assets not previously recognized  . .              -         (58.4)          (30.5)
  State income taxes, net   . . . . . . . . . . . . . . . . . . . .            2.0           2.7             3.8
  Other   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             .7           1.7               -

                                                                             36.7%         (20.0)%           7.3%


The Company's effective tax rate for  discontinued operations was 32.3%, 16.6% and  (34.6)% for 1997, 1996 and 1995,  respectively.
The income tax provision  for discontinued operations is not  at the statutory rate due  to the realization of deferred  tax assets
not previously recognized and to state and foreign taxes.



NOTE 6.  OTHER ACCRUED LIABILITIES

Other accrued liabilities at December 31, 1997, and 1996, were as follows:

(Dollars in thousands)                                                                      1997           1996

Accrual for estimated product liabilities   . . . . . . . . . . . . . . . . . . . .      $    1,027          1,318
Accrued salaries and wages  . . . . . . . . . . . . . . . . . . . . . . . . . . . .             118          1,012
Customer deposits   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,450            962
Accrued pension   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             912            564
Other accrued liabilities   . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,625          5,221

   Total other accrued liabilities                                                       $    5,132     $    9,077


NOTE 7.  DEBT

The components of debt at December 31, 1997, and 1996, were as follows:

(Dollars in thousands)                                                                      1997           1996

Revolving loan  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $    2,000     $   10,700
Other   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             300            114
                                                                                              2,300         10,814
Less current maturities   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           2,300             46
   Total long-term debt   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $        -     $   10,768


On February 12, 1993, the Company entered into  a three-year unsecured credit agreement with a bank which was amended  on   June 2,
1997.  Under  the amended agreement, the  Company can borrow up  to $17,000,000 in cash or  under letters of credit  on a revolving
line of credit through  April, 2000.  The interest  rate currently applicable to the  revolving line of credit is the  bank's prime
interest rate or,  at the Company's election,  1.125% over the London  Interbank Offered Rate (LIBOR).   At December 31,  1997, all
borrowings of $2,000,000 were at prime of 8.5%.  The interest rate can vary from prime to .25% over the  bank's prime interest rate
or, at the  Company's election, from 1.125%  to 1.875% over LIBOR  depending on the Company's  performance.  The provisions  of the
credit  agreement  include minimum  net  worth, interest  coverage,  working capital  and  leverage ratio  requirements,  and limit
additional indebtedness and cash dividend payments during the term of the agreement.

NOTE 8.  PENSION PLANS

The  Company has one noncontributory  defined benefit plan that  covers substantially all employees.   Benefits under this plan are
based on  years of service and, for salaried employees, the employee's average compensation during defined periods of service.  The
Company's funding policy is to make the minimum annual contributions required by applicable regulations.



Net pension cost for the pension plans in 1997, 1996 and 1995 is summarized as follows:

(Dollars in thousands)                                                      1997            1996           1995

Service cost  . . . . . . . . . . . . . . . . . . . . . . . . . . .       $     824      $      811     $      503
Interest cost   . . . . . . . . . . . . . . . . . . . . . . . . . .           1,179           1,222          1,112
Actual return on assets   . . . . . . . . . . . . . . . . . . . . .          (2,832)         (2,585)        (3,951)
Net amortization and deferral   . . . . . . . . . . . . . . . . . .           1,462           1,311          2,925

Net pension cost  . . . . . . . . . . . . . . . . . . . . . . . . .       $     633      $      759     $      589


Net  pension  costs of  $421,000,  $487,000 and  $367,000  were  allocated to  discontinued  operations for  1997,  1996 and  1995,
respectively.

Plan assets are  stated at fair value  and consist primarily of  cash, corporate equity and  debt securities.  The  following table
sets forth the funded status of the plan  and amounts recognized in the Company's consolidated balance sheets at December 31, 1997,
and 1996.

The assumptions used  in 1997  and 1996 to  develop the  periodic pension costs  were as  follows: the unit  credit cost  actuarial
method; a discount rate of 7.25% for 1997 and 7.5% for 1996; the expected  long-term rate of return on assets of 8.0%; and the rate
of increase in compensation levels of 4.5%.

(Dollars in thousands)
                                                                                             Current Plan Assets
                                                                                             Exceed Accumulated
                                                                                             Benefit Obligation
                                                                                              1997           1996
Actuarial present value of benefit obligation:

  Vested benefit obligation   . . . . . . . . . . . . . . . . . . . . . . . . .            $  3,752      $  16,205
  Non-vested benefit obligation   . . . . . . . . . . . . . . . . . . . . . . .                 153            245
  Accumulated benefit obligation  . . . . . . . . . . . . . . . . . . . . . . .               3,905         16,450
  Excess of projected benefit obligation
    over accumulated benefit obligation   . . . . . . . . . . . . . . . . . . .               1,223          2,174
  Projected benefit obligation  . . . . . . . . . . . . . . . . . . . . . . . .               5,128         18,624
  Plan assets at fair value   . . . . . . . . . . . . . . . . . . . . . . . . .               4,895         19,282
  Projected benefit obligation
    (in excess of) less than plan assets  . . . . . . . . . . . . . . . . . . .                (233)           658
  Unrecognized deferred gain  . . . . . . . . . . . . . . . . . . . . . . . . .              (1,078)        (2,764)
  Unrecognized prior service cost   . . . . . . . . . . . . . . . . . . . . . .                  12             28
  Unrecognized net asset  . . . . . . . . . . . . . . . . . . . . . . . . . . .                 (16)          (112)
  Unfunded accrued pension cost   . . . . . . . . . . . . . . . . . . . . . . .            $ (1,315)     $  (2,190)


In 1997, the Company  incurred a curtailment and a settlement of a portion of  the noncontributory defined benefit plan as a result
of transferring assets and liabilities for discontinued operations  to other pension trusts.  The result was an aggregate gain
of $1,530,000, which was recorded as part of the gain on the sale of discontinued operations.

The  Company has an unfunded  supplemental pension plan for certain  designated employees.  Liability of  $912,000 and $540,000 was
recorded as  of December 31,  1997, and 1996,  respectively, for this  plan which is  expected to be  settled in 1998.   Continuing
operations expensed $309,000, $39,000 and $73,000 in  1997, 1996 and 1995, respectively, related to the  supplemental pension plan.
Discontinued operations was charged $63,000 in 1997 for this plan.

NOTE 9.  SAVINGS AND INVESTMENT PLAN

Under the  Company's Savings  and Investment Plan,  qualified under  Section 401(k)  of the  Internal Revenue  Code, generally  all
salaried and hourly employees, including officers, may elect to defer a portion of their compensation to a trust established  under
the plan.   Depending  on  its sales  and net  income for  the  year, the  Company may  contribute up  to  an amount  equal to  the
participating employees' contributions, but not  in excess of six percent of the participating  employees' earnings.  Contributions
of $81,000, $152,000 and $46,000 were  made for eligible employees of continuing operations for the years  ended December 31, 1997,
1996 and  1995, respectively, representing 40%, 80% and  30% of eligible employees' contributions.   The plan permits the Company's
contribution to  be made in shares of the Company's common stock.   In 1997, 1996 and 1995, contributions of $173,000, $332,000 and
$119,000, respectively, were made for eligible employees of discontinued operations.

NOTE 10.  OTHER POST-RETIREMENT BENEFIT PLANS

The Company  has defined  benefit post-retirement  medical and life  insurance plans  covering most  full-time salaried and  hourly
employees.   The post-retirement health care plan is contributory, with retiree contributions adjusted annually, and contains other
cost-sharing features such as deductibles and coinsurance.  The life insurance plan is non-contributory.

The Company's  current policy is to  fund the cost of  the post-retirement medical and  life insurance benefits  on a pay-as-you-go
basis, as in prior years.  The following table presents the status of the plans at December 31, 1997, and 1996:

(Dollars in thousands)                                                                        1997           1996

Accumulated post-retirement benefit obligation (APBO):
  Retirees  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $      264     $    1,062
  Actives   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              63            255
     Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             327          1,317
Plan assets at fair value   . . . . . . . . . . . . . . . . . . . . . . . . . . . .               -              -
APBO in excess of plan assets   . . . . . . . . . . . . . . . . . . . . . . . . . .            (327)        (1,317)
Unrecognized transition obligation  . . . . . . . . . . . . . . . . . . . . . . . .             160            602
Unrecognized prior service costs  . . . . . . . . . . . . . . . . . . . . . . . . .               -              -
Unrecognized actuarial loss   . . . . . . . . . . . . . . . . . . . . . . . . . . .              94            494
Accrued post-retirement benefit costs   . . . . . . . . . . . . . . . . . . . . . .      $      (73)    $     (221)




Net periodic post-retirement benefit expense for 1997, 1996 and 1995, of continuing operations, included the following components:

(Dollars in thousands)                                                         1997            1996           1995
Service cost  . . . . . . . . . . . . . . . . . . . . . . . . . . .       $       4      $        7     $       51
Interest cost   . . . . . . . . . . . . . . . . . . . . . . . . . .              24              31             54
Amortization of transition obligation over 20 years   . . . . . . .              11              11             21
Gain  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               7              10             14
Net periodic post-retirement benefit expense  . . . . . . . . . . .       $      46      $       59     $      140


Net  periodic post-retirement  benefit expense  of $101,000,  $124,000 and  $247,000  for 1997,  1996 and  1995, respectively,  was
included in discontinued operations.

For  measurement purposes, the assumed trend  rate for post-retirement medical benefits  during 1997 and 1996  was 10.2% and 11.0%,
respectively, for employees  less than age-65 and 8.8%  and 9.5%, respectively, for employees  65 and older.  These  rates decrease
gradually to 7.0% and 6.0%, respectively, by  2001 and remain at that level thereafter.  The health care cost trend rate assumption
has a  significant effect on the amounts reported.  However, the Company's  cap on future net costs has mitigated the effect future
medical inflation  will have  on the plan.   The  Company maintains  a sick  pay plan for  certain hourly  individuals whereby  the
employee can accumulate unused benefits.  In 1997, expense of $125,000 was recorded as part of continuing operations.

The discount rate  used in determining the  accumulated post-retirement benefit  obligation was 7.5% at  December 31, 1997, and  at
December 31, 1996.

In  1997, the Company  incurred a curtailment  and settlement for  the defined benefit  post-retirement medical and  life insurance
plans as a  result of  transferring the liabilities  for discontinued  operations to the  buyers of  these operations.   A gain  of
$175,000 was recorded as part of the gain on the sale of discontinued operations.



NOTE 11.  STOCKHOLDERS' EQUITY

Changes in components of stockholders' equity for the years 1995 through 1997 follow:

(Dollars in thousands except share data)
                                                                                      Cumulative         No. of Shares
                                         Common    Additional   Treasury    Accum.    Translation        Common Stock
                                         Stock       Capital      Stock     Deficit   Adjustment            Issued
Balance at
  December 31, 1994                       4,283      46,518           -     (25,387)       (455)           4,283,260

Net income                                    -           -           -       2,898           -                -
Purchase of Treasury Stock                    -           -        (486)          -           -                -
Company's 1994 Investment
  Plan contribution                           -           -         380           -           -                -
Exercise of stock options                    50         131           -           -           -               49,916
Current year translation adjustment           -           -           -           -          96                    -
Balance at
  December 31, 1995                    $  4,333    $ 46,649     $  (106)   $(22,489)   $   (359)           4,333,176

Net income                                    -           -           -       6,891           -                    -
Cash dividends ($.08 per share)               -           -           -        (350)          -                    -
Purchase of Treasury Stock                    -           -        (241)          -           -                    -
Company's 1995 Investment
  Plan contribution                           -           -         185         (20)          -                    -
Exercise of stock options                    41         192           -           -           -               40,420
Current year translation adjustment           -           -           -           -         260                    -
Balance at
  December 31, 1996                    $  4,374    $ 46,841     $  (162)   $(15,968)   $    (99)           4,373,596

Net income                                    -           -           -      15,301           -                    -
Cash dividends ($.32 per share)               -           -           -      (1,403)          -                    -
Purchase of Treasury Stock                    -           -         371)          -           -                    -
Company's 1996 Investment
  Plan contribution                           -          39         431           -           -
Exercise of stock options                    54         380           -           -           -                54,512
Current year translation adjustment           -           -           -           -          99                    -
Balance at
  December 31, 1997                    $  4,428    $ 47,260     $  (102)   $ (2,070)   $      -             4,428,108
  In the fourth quarter of 1996, the Company resumed the payment of quarterly cash
dividends.  In 1997, the accumulated deficit was charged $1,403,000 for the four
quarterly dividends of 8 cents per share.
</TABLE>

The Company has 1,000,000  authorized, but unissued, shares of no  par preferred
stock.

NOTE 12.  INCENTIVE PROGRAM

The 1988 PORTEC, Inc. Employees' Stock  Benefit Plan was adopted by stockholders
in 1988 and amended  in 1994 and 1995.   This plan provides for the  granting of
incentive  and  nonqualified stock  options;  tandem  Stock Appreciation  Rights
(SARs)  in relation  to such  options, restricted  stock awards  and performance
units.  SARs entitle  the optionee to receive the  appreciation in value of  the
shares (i.e. the  difference between market value  price of a  share at time  of
exercise of  the SARs and  the option  price) in cash,  shares or a  combination
thereof.  SARs utilize the same shares reserved for issuance of options, and the
exercise of a SAR or an option  automatically cancels the related option or SAR.
Options  and related SARs  were granted at  prices which were  not less than the
fair market value of such  shares on the date  the option was granted.   Options
and related SARs may  be exercisable for periods of up to 10 years from the date
of  grant.   This  plan  permitted  the Company's  Board  of  Directors to  make
restricted stock awards to key employees whereby designated employees would have
shares  issued in their names which would be  restricted as to the right of sale
and  other  disposition  until  certain predetermined  performance  and/or  time
requirements were  met.  Also,  the Board could  contract with key  employees to
issue  shares to  them upon  their accomplishment  of predetermined  performance
targets.   The  plan  was amended  in  1994 to  increase by  440,000  the shares
available for grant  under the plan and to allow an annual grant of 1,000 shares
to non-employee directors.  The  plan was amended again in 1995 to  increase the
annual grant  to non-employee  directors to  2,000 shares,  to grant a  one-time
option for  7,000 shares to  non-employee directors  and to allow  certain stock
options and  SARs to be exercised within five years of termination of employment
or  service if such  is by death,  disability or retirement or  until the option
expires, whichever first occurs.  Options may be granted at prices not less than
the greater of  50% of the fair market  value of the shares or the  par value of
the shares.  The  granting of awards under this  plan may be made until  June 2,
1998.  All options become exercisable  commencing on a date no earlier than  six
months nor later than three  years from the date of grant.   By prior agreement,
all  125,700  outstanding  SARs under  this  plan are  exercisable  only  at the
discretion of  the Company.   There  were 740,703 shares  reserved for  issuance
under this plan at December  31, 1997, after adjustment for 10%  stock dividends
in 1992, 1993 and 1994.
<TABLE>
<S><C>
                                                     1997                      1996                     1995
                                               Option     Average        Option     Average       Option     Average
                                               Shares   Option Price     Shares  Option Price     Shares   Option Price
STOCK OPTIONS:
  Outstanding beginning of year   . .          690,256     $ 7.21       651,276     $  6.92       598,291    $   5.87
  Granted   . . . . . . . . . . . . .           12,000      10.41        81,500        9.93       104,000       11.50
  Exercised   . . . . . . . . . . . .          (54,512)      5.13       (40,420)       3.26       (49,915)       3.64
  Forfeited   . . . . . . . . . . . .          (58,100)     10.18        (2,100)      13.34        (1,100)      14.77

  Outstanding end of year   . . . . .          589,644       7.17       690,256     $  7.21       651,276    $   6.92

  Exercisable end of year   . . . . .          570,312       7.07       609,089     $  7.02       601,275    $   6.65
  Available for grant   . . . . . . .           92,959          -       104,959           -       186,459           -
</TABLE>

The Company applies APB Opinion 25 and related interpretations in accounting for
its plan.  The exercise price of all options  granted in 1997 and 1996 was equal
to  the fair  market value  of the  stock on  the grant  date.   Accordingly, no
compensation cost  has been recognized  for its  fixed stock option  plan.   Had
compensation cost for the  Company's compensation plan been determined  based on
the fair value at the grant dates  for awards under the plan consistent with the
method  of  FASB  Statement  123,  the  compensation  cost  for  employees  from
continuing  operations  and non-employee  directors  would  have been  $186,000,
$521,000  and $335,000 in 1997,  1996 and 1995,  respectively.  The compensation
cost  related to  discontinued operations  was $543,000,  $74,000 and  $7,000 in
1997, 1996 and 1995, respectively.  Net income and earnings per share would have
been reduced to the pro forma amounts indicated below:

<TABLE>
<S><C>

(Dollars in thousands)                                                      1997            1996           1995

Income from continuing operations
   As reported  . . . . . . . . . . . . . . . . . . . . . . . . . .       $   1,172      $    3,583     $    2,264
   Pro forma  . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,054           3,358          1,929

Income from discontinued operations
   As reported  . . . . . . . . . . . . . . . . . . . . . . . . . .          14,129           3,308            634
   Pro forma  . . . . . . . . . . . . . . . . . . . . . . . . . . .          13,785           3,276            627

Net income
  As reported   . . . . . . . . . . . . . . . . . . . . . . . . . .       $  15,301      $    6,891     $    2,898
  Pro forma   . . . . . . . . . . . . . . . . . . . . . . . . . . .          15,039           6,634          2,556

Earnings per share
Income from continuing operations
   Basic
     As reported  . . . . . . . . . . . . . . . . . . . . . . . . .       $     .27      $      .83     $      .53
     Pro forma  . . . . . . . . . . . . . . . . . . . . . . . . . .             .24             .78            .45
   Diluted
     As reported  . . . . . . . . . . . . . . . . . . . . . . . . .             .26             .78            .49
     Pro forma  . . . . . . . . . . . . . . . . . . . . . . . . . .             .23             .73            .42

Income from discontinued operations
   Basic
     As reported  . . . . . . . . . . . . . . . . . . . . . . . . .       $    3.23      $      .76     $      .15
     Pro forma  . . . . . . . . . . . . . . . . . . . . . . . . . .            3.15             .75            .14
   Diluted
     As reported  . . . . . . . . . . . . . . . . . . . . . . . . .            3.11             .72            .14
     Pro forma  . . . . . . . . . . . . . . . . . . . . . . . . . .            3.04             .72            .14

Net income
BASIC
  As reported   . . . . . . . . . . . . . . . . . . . . . . . . . .       $    3.50      $     1.59            .68
  Pro forma   . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.39            1.53            .59
DILUTED
  As reported   . . . . . . . . . . . . . . . . . . . . . . . . . .       $    3.37      $     1.50            .63
  Pro forma   . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.27            1.45            .56
</TABLE>

The weighted-average grant-date fair  value of options granted during  the years
1997, 1996 and 1995 was $4.21, $4.02 and $4.91, respectively.  The fair value of
each option granted was estimated  on the date of grant using  the Black-Scholes
option-pricing model  with the  following weighted-average assumptions  used for
grants in 1997, 1996  and 1995, respectively: expected  volatility 40% for  1997
and 44% for 1996 and 1995; expected lives of seven years for all years; dividend
yield of 2.7% for 1997 and  1995 and 3.3% for 1996; and risk-free  interest rate
of 6.7%, 6.7% and 6.6%, respectively.  The pro forma net income and earnings per
share are not indicative of the effects  on reported net income for future years
when all outstanding, nonvested awards will be included.

Options for 82,500 shares of stock  granted in 1994 at $12.33 were  repriced for
$10.09, the fair market value on December 17, 1996, the date they were repriced.
These options were recorded as though  cancelled and reissued.  No other changes
were  made  to  the  option  terms.    The  exercise  period  for  employees  of
discontinued operations holding options was extended from 90 days to one year in
1997.

The  following  table  summarizes  additional information  about  stock  options
outstanding at December 31, 1997:

<TABLE>
<S><C>
                   Options Outstanding                  Options Exercisable

         Range of       Outstanding       Remaining     Weighted-Average   Exercisable    Weighted-Average
     Exercise Prices                  at 12/31/97       Contractual Life          Exercise Price        at 12/31/97
     Exercise Price
    $$ 2.90 - $ 4.50      286,514         1.9 years          $  3.09         286,514            $ 3.09
     $ 8.40 - $14.80      303,130         7.9 years          $ 11.03         283,798            $11.09

</TABLE>
NOTE 13.  COMMITMENTS AND CONTINGENT LIABILITIES

There  are various  lawsuits and  claims pending  against the  Company.   In the
opinion of  management, any liabilities  that may result from  such lawsuits and
claims will not  materially affect  the consolidated financial  position of  the
Company.  The Company has provided for the estimated costs of any known losses.

The  Company leases the corporate headquarters in Lake Forest, Illinois, several
other properties and various transportation and data processing equipment.

Future minimum rent payments for major operating leases as of December 31, 1997,
which expire on or after December 31, 1998, are as follows:

(Dollars in thousands)
Year ending December 31,
  1998  . . . . . . . . . . . . . . . . . . . . . . . . .     $132
  1999  . . . . . . . . . . . . . . . . . . . . . . . . .       80
  2000  . . . . . . . . . . . . . . . . . . . . . . . . .       10


Net  rent expense  related to  continuing operations  of $159,000,  $222,000 and
$236,000 was recorded in 1997, 1996 and 1995, respectively.



NOTE 14.  UNAUDITED QUARTERLY FINANCIAL INFORMATION

The 1996 interim  results of operations were impacted by  the effect of reducing
the  valuation  allowance  against  deferred tax  assets  based  on management's
judgement about the Company's ability to realize such assets in the future.
<TABLE>
<S><C>
(Dollars in thousands except per share data)
                                                               March 31       June 30    September 30  December 31
1997
Net sales   . . . . . . . . . . . . . . . . . . . . . . .      $   6,053     $  6,112      $  7,096      $  6,260
Gross margin  . . . . . . . . . . . . . . . . . . . . . .          2,633        2,582         2,801         2,472
Net income from continuing operations   . . . . . . . . .             86          268           355           463
Income from discontinued operations   . . . . . . . . . .            695        1,274           842        11,318
Net income  . . . . . . . . . . . . . . . . . . . . . . .            781        1,542         1,197        11,781

BASIC INCOME PER COMMON SHARE
   Income from continuing operations  . . . . . . . . . .            .02          .06           .08           .11
   Income from discontinued operations  . . . . . . . . .            .12          .33           .19          2.59
     Net income   . . . . . . . . . . . . . . . . . . . .            .14          .39           .27          2.70

DILUTED INCOME PER COMMON SHARE
   Income from continuing operations  . . . . . . . . . .            .02          .06           .08           .10
   Income from discontinued operations  . . . . . . . . .            .12          .32           .18          2.49
     Net income   . . . . . . . . . . . . . . . . . . . .      $     .14     $    .38      $    .26      $   2.59

(Dollars in thousands except per share data)
                                                               March 31       June 30    September 30   December 31
1996
Net sales   . . . . . . . . . . . . . . . . . . . . . . .      $   7,588     $  6,770      $  5,617      $  7,242
Gross margin  . . . . . . . . . . . . . . . . . . . . . .          2,671        2,480         2,294         3,090
Income from continuing operations   . . . . . . . . . . .            504          197           387         2,495
Income (loss) from discontinued operations  . . . . . . .          1,469        1,724           621          (506)
Net income  . . . . . . . . . . . . . . . . . . . . . . .          1,973        1,921         1,008         1,989

BASIC INCOME (LOSS) PER COMMON SHARE
   Income from continuing operations  . . . . . . . . . .            .11          .05           .09           .58
   Income (loss) from discontinued operations   . . . . .            .34          .40           .14          (.12)
     Net income   . . . . . . . . . . . . . . . . . . . .            .45          .45           .23           .46

DILUTED INCOME (LOSS) PER COMMON SHARE
   Income from continuing operations  . . . . . . . . . .            .11          .05           .08           .54
   Income (loss) from discontinued operations   . . . . .            .32          .37           .14          (.11)
     Net income   . . . . . . . . . . . . . . . . . . . .      $     .43     $    .42      $    .22      $    .43
</TABLE>

NOTE 15.  ACQUISITIONS

In April 1994,  the Company acquired  substantially all of  the assets of  Count
Recycling  Systems, Inc.  (renamed  Countec), a  supplier of  materials recovery
facilities  in the  sorting and  recycling of  residential and  commercial solid
waste.  This  business was acquired for cash  and earnouts to be based  upon the
future profitability of  the business.   During 1997, 1996  and 1995,  $200,000,
$200,000 and $400,000, respectively,  were paid under the earnout  agreement and
goodwill was  increased by these amounts.   No further earnout  payments are due
under the agreement.


NOTE 16.  SUBSEQUENT EVENTS

On  March  11, 1998,  the  Company announced  that  it had  signed  a definitive
agreement to  be acquired  by an affiliate  of J  Richard Industries, L.P.   The
transaction is  structured  as a  merger  with  Portec, Inc.  as  the  surviving
company.  In the merger,  each share of Company  common stock will be  converted
into the right to receive $16.00 per share in cash for a total transaction value
of approximately  $76,000,000.   Upon completion of  the merger, Portec  will no
longer be a public company  and its shares will not trade on the  New York Stock
Exchange.

The  transaction is  subject  to  completion  of  due  diligence, obtaining
shareholder approval and completion of acceptable financing arrangements.
In addition, the transaction is  subject to other  customary conditions.
In connection with  the acquisition, there will be certain termination
liabilities which will be assumed by the acquiror.


<TABLE>
<S><C>




                                                   PORTEC, Inc. AND SUBSIDIARIES

                                   SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                         For the Years Ended December 31, 1997, 1996, 1995
                                                         ($000's omitted)



                                                                         Additions
                                                                         Charged              Deductions
                                                  Balance                to Costs             from                   Balance
                                                  Beginning              and                  at                     at End
                                                  of Year                Expenses             Reserve(1)             of Year

  1997 Allowance for doubtful accounts        $    357                $    36                $ (393)               $   0
  1996 Allowance for doubtful accounts             463                    233                   339                  357
  1995 Allowance for doubtful accounts             403                    152                    92                  463


  (1) Write offs, net of recoveries.  1997 includes the effects of the disposal of certain segments.


                                                 Balance                 Reversal                                    Balance
                                                 Beginning                of Timing            Revaluation           at End
                                                 of Year                 Differences           of Reserve            of Year
  1997 Deferred tax assets valuation allow.   $      0               $       0               $     0                $    0
  1996 Deferred tax assets valuation allow.      3,133                  (1,668)               (1,465)                    0
  1995 Deferred tax assets valuation allow.      4,110                    (977)                    0                 3,133

QUARTERLY STOCK & DIVIDEND INFORMATION

                                                                    First       Second       Third      Fourth
Common Stock Prices(1)                                              Quarter     Quarter      Quarter    Quarter

1997 Common Stock Prices
  High  . . . . . . . . . . . . . . . . . . . . . . . . . .       $  12.13     $  11.88    $  13.25     $  15.00
  Low   . . . . . . . . . . . . . . . . . . . . . . . . . .           9.50         9.88       11.25        12.81
  Cash dividends per share  . . . . . . . . . . . . . . . .            .08          .08         .08          .08


1996 Common Stock Prices
  High  . . . . . . . . . . . . . . . . . . . . . . . . . .       $   10.00    $   11.13   $   10.50    $   10.88
  Low   . . . . . . . . . . . . . . . . . . . . . . . . . .            8.88         9.25        9.25         9.50
  Cash dividends per share  . . . . . . . . . . . . . . . .               -            -           -          .08

(1)  The high and low prices are based on prices as reported on the Composite Tape.
The transaction  is subject  to completion  of due diligence  and obtaining  acceptable financing arrangements.   In  addition, the
transaction is subject to other customary conditions.
</TABLE>
                                                                   EXHIBIT INDEX

                                                                        Page No.
                                                                          Within
                                                                      Sequential
                                                                       Numbering
                                                                       System of
                                                                         Exhibit
Exhibit        Description

 2(a)        The  Agreement and Plan of Merger dated as of March 11,
             1998  with MHD  Acquisition Corp.,  an affiliate  of J.
             Richard Industries, L. P., a copy of which was included
             as Exhibit  (99)(c) of  the Company's 8-K  Report dated
             March 11, 1998.*

 2(b)        The Asset Purchase  Agreement between Astec Industries,
             Inc.  and  Portec,  Inc.  dated October  16,  1997,  as
             amended  on  December  2, 1997,  a  copy  of which  was
             included as Exhibit (2)(a)  of the Company's 8-K Report
             dated December 12, 1997.
 2(c)        The  Asset Purchase  Agreement  between  Rail  Products
             Acquisition Corp.  and Portec,  Inc. dated  November 6,
             1997., a copy  of which was included as  Exhibit (2)(b)
             of the Company's 8-K Report dated December 12, 1997.*

 3(a)        The Company's Certificate of Incorporation,  as amended
             to  April 29,  1987, a  copy of  which was  included as
             Exhibit (a)3  of the Company's Form 10-Q Report for the
             quarter ended March 31, 1987.*

 3(b)        The  Company's By-Laws,  as amended  April 23,  1991, a
             copy of  which  was included  as  Exhibit 3(a)  of  the
             Company's Form 10-Q Report  for the quarter ended March
             31, 1991.*

 4(a)        Credit Agreement  dated as of February 12,  1993 by and
             between NBD Bank and  the Company, a copy of  which was
             included as  Exhibit (4)(a)  of the Company's  Form 8-K
             Report dated March 18, 1993.*

 4(b)        First amendment  to Credit Agreement dated  as of April
             26, 1994 by  and between  NBD Bank and  the Company,  a
             copy  of which  was  included as  Exhibit  4(b) of  the
             Company's Form 10-K Report  for the year ended December
             31, 1994.*

 4(c)        Second amendment  to Credit Agreement dated  as of June
             13, 1995 by  and between  NBD Bank and  the Company,  a
             copy  of which  was  included as  Exhibit  4(c) of  the
             Company's Form 10-K Report  for the year ended December
             31, 1995.*

 4(d)        Third amendment to Credit Agreement dated as of June 2,
             1997 by  and between  American National Bank  and Trust
             Company of Chicago and the Company.

10(a)        The Division Management Incentive Compensation
             Plan effective January 1, 1997.(x)

10(b)        The  Company's  Supplemental  Non-Qualified  Retirement
             Income  Plan  For  Designated  Executive  Employees  as
             amended effective January 1, 1994, a copy  of which was
             included as  Exhibit 10(c)  of the Company's  Form 10-K
             Report for the year ended December 31, 1994.*(x)

10(c)        The 1988 PORTEC, Inc. Employees' Stock Benefit Plan, as
             amended  effective April 26, 1994, a  copy of which was
             included as  Exhibit 10(e)  of the Company's  Form 10-K
             Report for the year ended December 31, 1994.*(x)

10(d)        Amendment  to The  1988 PORTEC,  Inc. Employees'  Stock
             Benefit  Plan, effective as of April 25, 1995 a copy of
             which was  included as  Exhibit 10(f) of  the Company's
             Form  10-K  Report  for  the year  ended  December  31,
             1995.*(x)

10(e)        Amended and Restated Agreement dated February 28, 1989,
             between the Company and  M. T. Yonker, a copy  of which
             was included as Exhibit 10(o) of the Company's Form 10-
             K Report for the year ended December 31, 1988.*(x)

10(f)        Letter  Agreement dated December  12, 1989, between the
             Company and  M. T.  Yonker which amended  the agreement
             dated February 28, 1989, between the  Company and M. T.
             Yonker,  a copy of which was  included as Exhibit 10(o)
             of  the Company's Form  10-K Report for  the year ended
             December 31, 1989.*(x)

10(g)        Letter  Agreement  dated  July  9,  1997,  between  the
             Company and  M. T.  Yonker which amended  the agreement
             dated February 28, 1989.(x)

10(h)        Letter Agreement  dated February 26, 1998,  between the
             Company and  M. T.  Yonker which amended  the agreement
             dated February 28, 1989.(x)

10(i)        Letter  Agreement  dated  July  17, 1997,  between  the
             Company and M. T. Yonker.(x)

10(j)        Letter Agreement  dated February 25, 1998,  between the
             Company and  M. T.  Yonker which amended  the agreement
             dated July 17, 1997.(x)

10(k)        Employment  Agreement dated November  16, 1989, between
             the Company and N. A. Dedert-Kindl, a copy of which was
             included as  Exhibit 10(r)  of the Company's  Form 10-K
             Report for the year ended December 31, 1989.*(x)

10(l)        Letter  Agreement  dated  July  9,  1997,  between  the
             Company  and N.  A. Kindl  which amended  the agreement
             dated November 16, 1989, between the Company and N.  A.
             Kindl.(x)

10(m)        Letter  Agreement  dated  July 17,  1997,  between  the
             Company and N. A. Kindl.(x)

10(n)        Letter Agreement dated  February 25, 1998,  between the
             Company  and N.  A. Kindl  which amended  the agreement
             dated July 17, 1997.(x)

10(o)        Letter  Agreement  dated  July 17,  1997,  between  the
             Company and K. C. Rorke.(x)

10(p)        Letter Agreement dated  February 25, 1998,  between the
             Company  and K.  C. Rorke  which amended  the agreement
             dated July 17, 1997.(x)

11           The Company's statement regarding computations
             of per share earnings.

21           List of the Company's subsidiaries.

23           Consent of Independent Accountants.

27           Financial Data Schedule.

99(a)        11-K  Report for 1997 for the PORTEC, Inc. Savings  and
             Investment Plan.(x)


99(b)        Important  Factors  and Assumptions  Regarding Forward-
             Looking  Statements, a  copy of  which was  included as
             Exhibit 99(b) of the Company's Form 10-K Report for the
             year ended December 31, 1996.*

                 *  Incorporated herein by reference.
      (X) Management contract or compensatory plan or arrangement.