EXHIBIT 10(j)

                           EMPLOYMENT AGREEMENT


            THIS EMPLOYMENT  AGREEMENT is  made this  23rd day  of  July,
  1999, between  PEERLESS  MFG.  CO.  ("Employer"),  and  GILBERT  DARWYN
  CORNWELL ("Employee").


                                Employment

     1.1 Employment and Term.   Employer agrees to  employ Employee as  a
  senior executive pursuant to this Agreement from the date hereof  until
  such employment is terminated as provided herein.  This Agreement shall
  survive any termination of Employee's employment.

     1.2 Duties.   Employee  agrees to  devote  his time,  attention  and
  energies to  perform the  duties of  the  offices he  holds as  may  be
  prescribed from time to time by The Board of Directors and/or the Chief
  Executive Officer of Employer.

     1.3 Supervision.   Employee shall perform  the duties of  employment
  under the  direction  and  supervision of  Employer's  Chief  Executive
  Officer.


                              Non-Competition

     2.1 During Term.   During the  period of his  employment under  this
  Agreement, Employee shall be  employed only by  Employer and shall  not
  engage in any activity in competition with Employer.

     2.2 After Termination; Non-Competition.  Employee agrees that for  a
  period of three (3) years following termination of employment,  without
  regard to the reason for termination,  Employee shall not, directly  or
  indirectly, compete  with  Employer  or  perform  any  services  for  a
  competitor of Employer, including as an employee, consultant,  advisor,
  owner, partner,  participant  in a  joint  venture or  corporation,  or
  otherwise.  Employee specifically acknowledges that Employer's products
  are sold in  a world market,  and that Employee  has been engaged  with
  regard to Employer's products  and Employer's customers throughout  the
  world without  geographic limitation,  and  accordingly that  the  non-
  competition agreement  contained in  this section  shall apply  without
  geographic limitation.

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                              Confidentiality

     3.1 Confidentiality.    All  written  material  (including  but  not
  limited to engineered  designs, formulas,  drawings, studies,  reports,
  calculations,  product  designs,  product  specifications,  engineering
  specifications, customer specifications,  customers names and  customer
  contacts) of  any type  pertaining to  the  business of  Employer  (the
  "Material"),  the  use  or  application  of  such  Material,  or  other
  information with respect to customers of Employer, is confidential, and
  the  sole  and  exclusive  property  of  Employer  without  regard   to
  authorship, and  shall not  be duplicated  or removed  from  Employer's
  office except as required in connection with performance of  Employee's
  duties hereunder.  Upon termination  of employment, Employee agrees  to
  return all such Material and  all copies thereof (including  electronic
  documents and copies)  to Employer and  Employee shall  not retain  any
  copies (including electronic copies) thereof.  Employee further  agrees
  that the design and application of Employee's products is  confidential
  and that  during Employee's  term of  employment  and during  the  non-
  competition period  following  termination of  employment  pursuant  to
  Section 2 of this Agreement, not to divulge any confidential matters or
  confidential  written  material  to  any   person  not  subject  to   a
  confidentiality agreement  with  Employer,  except as  may  be  legally
  required or required by a customer  of Employer in connection with  the
  customer's use of Employer's products.


                                Termination

     4.1     Termination by Employer.

         (a)     Employer may terminate  Employee's employment  hereunder
  without cause  or  reason  with thirty  (30)  days  written  notice  of
  termination to Employee.  Employer and Employee agree that in the event
  of any such termination,  both parties will  use reasonable efforts  to
  determine  a   mutually  acceptable   continuing  relationship   (e.g.,
  retention as an outside consultant).

         (b) If  a mutually  acceptable alternative  agreement cannot  be
  reached within  sixty  (60)  days  after  termination,  Employee  shall
  receive as  severance  compensation  for  a  period  of  one  (1)  year
  following termination, a lump sum annual payment in an amount equal  to
  90% of his then current base salary, plus dividends payable under share
  grants pursuant to the Employer's Stock Grant Plan, and the full  range
  of Employer benefits.

     4.2 Termination  by Employee.    Employee may  terminate  Employee's
  employment hereunder upon thirty (30) days written notice to Employer.

     4.3 Termination on  Death of  Employee.   This Employment  Agreement
  shall terminate upon the death of Employee.

     4.4 Termination  by  Disability.   Employment  may  terminate  as  a
  result  of  Employee   becoming  permanently   disabled,  mentally   or
  physically, and unable to perform the duties hereunder.  Employee shall
  be paid a  minimum of  six (6) months  salary plus  all other  existing
  Employer disability  benefits  upon  such termination.    Employee  and
  Employer agree to  binding arbitration  in the  event of  disagreements
  regarding the meaning or intent of this clause.
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     4.5 Termination  by   Retirement.     Retirement  of   Employee   is
  anticipated at age 65.   Retirement prior  to age 65  may occur at  the
  option of Employee.   Retirement  after age 65  will be  at the  annual
  option of the  Board of Directors.   Retirement benefits  shall be  all
  normal benefits provided by the Company.  Severance benefits defined by
  Section 4.1(b) are not to be interpreted as retirement benefits.


                               Miscellaneous

     5.1 This Agreement and that certain Agreement of even date  herewith
  between Employer and  Employee regarding  certain agreements  effective
  upon a change-in-control (as defined  therein) are the only  agreements
  in  force  between  Employer and  Employee regarding the subject matter
  hereof and the same supersede all prior agreements.

     5.2 This Agreement may only  be amended by written amendment  signed
  by Employer and Employee.

     5.3 This Agreement  shall be governed  by the laws  of the State  of
  Texas.


                                     PEERLESS MFG. CO.

                                     ____________________________________
                                     CHAIRMAN
                                     BOARD OF DIRECTORS
                                     BY ORDER OF THE BOARD OF DIRECTORS


                                     EMPLOYEE

                                     ____________________________________
                                     Gilbert Darwyn Cornwell