SECURITIES AND EXCHANGE COMMISSION
                                                           
                            WASHINGTON, D. C.   20549

                                    FORM 10-Q

   (Mark One)

   ( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934.

   For Quarterly Period Ended September 30, 1996, or

   (   ) Transition report pursuant  to Section 13 or 15(d) of  the Securities
         Exchange Act of 1934.

   For the transition period from __________ to __________

   Commission File No. 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 No.)

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

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

   ---------------------------------------------------------------------------  
   (Former name, former address and former fiscal year, if changed since last 
   report).

   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 (or for such shorter period that the
   Registrant was required to file  such reports), and (2) has been subject to
   such filing requirements for the past 90 days.

                                 YES      X       NO         
                                       ------          ------

   Number of  shares of  Registrant's Common  Stock ($1 per  share par  value)
   issued and outstanding at November 11, 1996 - 4,335,596.





                                     PART I
                                     ------
                              FINANCIAL INFORMATION
                              ---------------------

   ITEM 1:  FINANCIAL STATEMENTS
   -----------------------------

                     PORTEC, INC. CONSOLIDATED BALANCE SHEET
       AS OF SEPTEMBER 30, 1996; DECEMBER 31, 1995; AND SEPTEMBER 30, 1995
                             (THOUSANDS OF DOLLARS)

 
                                      (Unaudited)                   (Unaudited) 
                                        9/30/96        12/31/95       9/30/95
                                      -------------  -------------   ---------  
   CURRENT ASSETS
    Cash and cash equivalents         $   5,400      $   3,477       $   3,956 
    Accounts and notes receivable,       16,468         13,130          13,080 
     less allowances
    Inventories                          15,361         17,977          17,809 
    Other current assets                  1,901          1,867           1,754 
                                      ---------      ---------       --------- 
     Total current assets                39,130         36,451          36,599 
                                      ---------      ---------       --------- 

   PROPERTY, PLANT AND EQUIPMENT, AT COST
    Land                                    220            220             220 
    Buildings and improvements           11,333         10,824          10,609 
    Machinery and equipment              22,080         20,884          20,505 
                                      ---------      ---------       --------- 
                                         33,633         31,928          31,334 
    Less accumulated depreciation       (19,353)       (17,757)        (17,487)
                                      ---------      ---------       --------- 
     Total property, plant and equipment 14,280         14,171          13,847 
                                      ---------      ---------       --------- 

   ASSETS HELD FOR SALE                   2,070          2,070           2,070 
                                      ---------      ---------       --------- 
   GOODWILL                               3,687          2,283           3,546 
                                      ---------      ---------       --------- 
   OTHER ASSETS AND DEFERRED CHARGES      3,038          2,843           2,910 
                                      ---------      ---------       --------- 

     Total                            $  62,205      $  57,818       $  58,972 
                                      =========      =========       =========


   CURRENT LIABILITIES
    Current portion of long-term debt $      46      $      46       $      0 
    Accounts payable                      5,583          7,578          5,987 
    Other accrued liabilities             7,964          9,452         10,602 
                                      ---------      ---------       -------- 
      Total current liabilities          13,593         17,076         16,589 
                                      ---------      ---------       -------- 

   LONG-TERM DEBT                        13,080         10,117          9,752 
                                      ---------      ---------       -------- 

   DEFERRED CREDITS
    Pensions                              1,923          1,923          1,997 
    Other deferred credits                  677            674            511 
                                      ---------      ---------       -------- 
     Total deferred credits               2,600          2,597          2,508 
                                      ---------      ---------       -------- 

   STOCKHOLDERS' EQUITY
    Common stock, $1 par value; authorized
     10,000,000 shares; issued 4,335,596
     4,333,176 and 4,317,675 shares       4,336          4,333          4,318 
    Additional capital                   46,642         46,649         46,618 
    Cumulative translation adjustment      (369)          (359)          (485)
    Accumulated deficit                 (17,587)       (22,489)       (20,257)
                                      ---------      ---------       -------- 
                                         33,022         28,134         30,194 
    Treasury stock, 10,021, 9,562 and
     5,962 common shares at cost            (90)          (106)           (71)
                                      ---------      ---------       -------- 
     
     Total stockholders' equity          32,932         28,028         30,123 
                                      ---------      ---------       -------- 

     Total                            $  62,205      $  57,818       $ 58,972 
                                      =========      =========       ========


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

<TABLE>

                                                           PORTEC, INC.
                                     CONSOLIDATED STATEMENT OF INCOME AND ACCUMULATED DEFICIT
                             FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
                                           (THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
                                                            (UNAUDITED)
                                                                              
<CAPTION>
                                                 Three Months Ended 9/30               Nine Months Ended 9/30               
                                          -----------------------------------    -------------------------------

                                               1996              1995                 1996              1995       
                                          --------------    ---------------      --------------    -------------

<S>                                       <C>               <C>                  <C>               <C>
Revenues
 Net sales                                $       21,006    $        21,918      $       76,882    $      77,506
Other income                                          60                181                 (77)             470
                                          --------------    ---------------      --------------    -------------
   Total                                          21,066             22,099              76,805           77,976
                                          --------------    ---------------      --------------    -------------

Costs and expenses
 Cost of goods sold                               15,118             15,448              55,043           54,996 
 Selling, general and administrative               4,864              5,245              15,490           16,423
 Interest                                            267                424                 867            1,287
                                          --------------    ---------------      --------------    -------------
  Total                                           20,249             21,117              71,400           72,706
                                          --------------    ---------------      --------------    ------------- 


Income before income taxes                           817                982               5,405            5,270
Income tax provision                                (191)                28                 503              140
                                          --------------    ---------------      --------------    -------------


Net income                                         1,008                954               4,902            5,130
Accumulated deficit - beginning of period        (18,595)           (21,211)            (22,489)         (25,357)          
                                          --------------    ---------------      --------------    -------------
Accumulated deficit - end of period              (17,587)           (20,257)            (17,587)   $     (20,257)
                                          ==============    ===============      ==============    ============= 



Earnings per common share:                $          .22    $           .21    $           1.07    $        1.11 
                                          ==============    ===============    ================    =============


Average number of shares outstanding           4,574,739          4,599,347           4,575,311        4,601,749



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

</TABLE>


                                 PORTEC, INC.
                     CONSOLIDATED STATEMENT OF CASH FLOWS
      FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
                            (THOUSANDS OF DOLLARS)
                                  (UNAUDITED)


                                                    9 MONTHS ENDED 9/30   
                                                  -------------------------

                                                   1996               1995
                                                  ------             ------
Cash flows from Operating Activities:
 Net income                                     $  4,902           $  5,130 
 Adjustments to reconcile net income
   to net cash provided by operating
   activities:
     Depreciation and amortization                 1,945              1,816 
     Decrease (increase) in receivables           (3,338)               144 
     Decrease (increase) in inventories            3,315               (336)
     Decrease (increase) in other net assets
      and deferred charges                            35               (187)
     Gain on sale of assets                           (1)              (334)
     Increase in deferred credits                     40                332 
     Decrease in accounts payable
      and accruals                                (3,356)            (1,542)
                                                --------           -------- 
     Net cash provided by operating
       activities                                  3,542              5,023 
                                                --------           -------- 

Cash flows from Investing Activities:
 Acquisitions                                     (2,600)              (400)

 Capital expenditures                             (1,675)            (2,349)
 Proceeds from disposal of property, 
  plant and equipment                                  6                754 
                                                --------           -------- 
    Net cash used by
     investing activities                         (4,269)            (1,995)
                                                --------           -------- 

Cash flows from Financing Activities:
 Net borrowing (repayment) of revolving credit
  agreement                                        3,000             (2,105)
 Repayment of other long-term debt                   (37)               (19)
 Issuance of common stock                             16                135 
 Purchase of treasury stock                         (168)              (451) 
                                                --------           --------  
   Net cash provided (used) by financing
    activities                                     2,811             (2,440)
                                                --------           -------- 

                                              
Effect of exchange rate change                      (161)               (30)
                                                --------           -------- 
Net increase in cash and
 cash equivalents                                  1,923                558 
Cash and cash equivalents at
 beginning of year                                 3,477              3,398 
                                                --------           -------- 

Cash and cash equivalents at
 end of period                                  $  5,400           $  3,956 
                                                ========           ======== 



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




                                 PORTEC, INC.
               NOTES TO FINANCIAL STATEMENT - SEPTEMBER 30, 1996
                            (THOUSANDS OF DOLLARS)



1.   Inventories at September 30,  1996; December 31, 1995;  and September 30,
1995 were:


                                           9/30/96    12/31/95    9/30/95
                                         ----------  ----------  ---------

       Raw Materials and Supplies        $   5,131   $    5,923  $   4,840
       Work-in-Process                       3,601        5,313      5,556
       Finished Goods                        6,629        6,741      7,413
                                         ---------   ----------  ---------
                                         $  15,361   $   17,977  $  17,809
                                         =========   ==========  =========


2.   Financial  statements for the  nine months  ended September  30, 1996 are
subject to audit adjustments.


3.   The accompanying financial statements reflect all adjustments which were,
in the opinion of management, necessary to a  fair statement of the  results for
the period presented, and all of  these  adjustments  were  of a  normal 
recurring nature.  For full disclosure of significant accounting policies,
see Note 1 of the PORTEC, Inc. 1995 Annual Report.
 
          


ITEM 2.  Management's Discussion and Analysis of Financial
         -------------------------------------------------
         Condition and Results of Operations
         -----------------------------------


Net revenues  were $21,066,000 for the  quarter ended September 30,  1996 or 5
percent below the net revenues of $22,099,000 for the quarter ended  September
30, 1995.  The decrease was due to reduced sales in the Construction Equipment
and Railroad  segments.  The Construction Equipment segment experienced weaker
market demand compared with last year for environmental and aggregate crushing
equipment.   The  Railroad  segment  had  a  decline in  sales  due  to  lower
production of specialty railcars that use our load securement products  and to
lack of demand for rail products in the United Kingdom market.   The Materials
Handling segment had an  increase in sales due to strong market demand for the
traditional power turn products.

Net income of $1,008,000  for the third quarter of 1996  was $54,000 above the
prior year's net income of $954,000.  The 1996 net income  included a reversal
of  $221,000 in foreign  income tax which  had been recorded  during the first
half of the year.   This reversal  was due to availability  of a Canadian  tax
loss carryforward.   All segments  experienced lower operating  income in  the
third  quarter  of 1996  compared  with  the  same  period  last  year.    The
Construction Equipment  segment's results  were impacted  by lower volume  and
accompanying price pressure.   The operating income of the  Materials Handling
segment was below that of the third  quarter of 1995 due to increased overhead
spending and  lower volume at  the Company's  Countec operation.   Lower sales
volume resulted in lower operating income for the Railroad segment.

For the third quarter  of 1996, the gross margin was 28  percent compared with
30 percent for the third quarter of 1995.  Selling, general and administrative
expense  was 23 percent of net sales for  the three months ended September 30,
1996 versus 24 percent for the same period in 1995.   The decrease reflected a
reduction in professional fees and  certain insurance costs.  Other income  in
the third  quarter of 1996 was $121,000 below that  of the same period in 1995
which included a gain on the sale of assets  of the PVH business in the United
Kingdom.   Interest expense decreased  $157,000 during the  three months ended
September 30,  1996 compared with  the same  period last year  as a  result of
decreased  activity  in Construction  Equipment's floor  plan financing.   The
income tax  provision  in  the  third quarter  of  1996  included  a  $200,000
reduction in the valuation reserve for deferred taxes.

Net revenues  and  the corresponding  net  income for  the nine  months  ended
September  30, 1996  were $76,805,000  and $4,902,000,  respectively, compared
with net  revenues of $77,976,000 and  net income of $5,130,000  for the first
nine months of 1995.  Sales for the period were 1 percent below the prior year
due to a  decline in the sale of green waste  processing equipment supplied by
our Construction Equipment segment.   The 4 percent decrease in net  income in
the  first nine  months of 1996  reflected lower  gross margins  of 28 percent
versus 29 percent in 1995.  This decrease was offset by lower selling, general
and administrative  expense  of  $933,000  and  reduced  interest  expense  of
$420,000  resulting in a  3 percent increase  in income before  tax.  A higher
effective tax  rate impacted  net income  for the first  nine months  of 1996.
This increase  was due to the  utilization of the remaining  domestic tax loss
carryforward.

Current  assets  were   $39,130,000  at  September  30,   1996  compared  with
$36,451,000 at December 31, 1995 and $36,599,000 at September 30,  1995.  Cash
increased $1,923,000 and $1,444,000  from December 31, 1995 and  September 30,
1995, respectively.  Receivables of $16,468,000 at September 30,  1996 were up
$3,338,000 from  December 31, 1995 as a result  of changes in sales volume and
slower collections.  The  $3,388,000 change from September 30,  1995 reflected
an  increase in days in accounts receivable  in the Construction Equipment and
Railroad segments.   Inventories decreased $2,616,000  from December 31,  1995
and $2,448,000 from  September 30, 1995.  The decrease  from year end resulted
from reduced Canadian inventory in anticipation of lower seasonal sales  and a
focused effort to reduce inventory at the Construction Equipment segment.  The
decrease  from  September 30,  1995  was  due to  the  write-off of  Innovator
inventory at year end and to a continuing effort to reduce inventory.

Fixed asset acquisitions were $1,675,000 during the first nine  months of 1996
versus  $2,349,000 during  the same  period  of last  year.   Depreciation and
amortization of  $1,945,000 was  up  $129,000 over  that of  last  year.   The
increase in goodwill of  $1,404,000 from December 31,  1995 resulted from  the
acquisition  of Moore  &  Steele, a  producer  of railroad  track  lubrication
products, in July  and payment on  certain earn out  provisions related to  an
acquisition.  These  changes were partially  offset by amortization.   The net
increase in goodwill of $141,000 from September 30, 1995 to September 30, 1996
was the result of the above mentioned goodwill additions partially offset by a
write-off of goodwill  related to  the Innovator acquisition  at December  31,
1995 and amortization.

At  September 30, 1996, current liabilities were down $3,483,000 from December
31,  1995 and $2,996,000 from  September 30, 1995.   The change  from year end
resulted from  a decrease  in accounts  payable due  to lower working  capital
needs  and to  lower  customer deposits.   A  decrease  in customer  deposits,
accrued expenses and  other current  liabilities resulted in  the change  from
September 30, 1995.  

Long-term debt of $13,080,000  was $2,963,000 and $3,328,000 higher  than that
of December 31, 1995 and September 30, 1995, respectively.  The increases were 
due  to the acquisition  of Moore & Steele  and to a  large pension payment 
made in September of 1996.

The increase in stockholders' equity  of $4,904,000 from December 31,  1995 to
September 30,  1996 was attributable to  net income and the  exercise of stock
options.   These  were  partially  offset by  an  increase  in the  cumulative
translation adjustment.  The $2,809,000  increase in stockholders' equity from
September 30,  1995 to September 30, 1996 was due  to a loss during the fourth
quarter of 1995 and net income during the first three quarters of 1996 and the
exercise of stock options.  The  increase in cumulative translation loss  also
impacted the result.  The  Company declared an 8 cent cash dividend  on common
stock  for the  fourth quarter  of  1996.   This  is the  first cash  dividend
declared by the Company since 1986.

The  Company received new  orders of $19,992,000  during the  third quarter of
1996 compared with $23,701,000 for the third quarter of 1995.   The 16 percent
decrease  was  attributable to  a significant  reduction  in bookings  for the
Construction  Equipment and  Materials  Handling segments  while the  Railroad
segment  experienced increased bookings.  The order backlog was $18,069,000 at
September 30, 1996 compared  with $21,590,000 and $19,527,000 at  December 31,
1995 and September 30, 1995, respectively.


Liquidity

On  February 12, 1993, the Company entered into a credit agreement with a bank
which was amended at April 26, 1994, and June 13, 1995.  The amended agreement
provides up  to $15,300,000 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.  The provisions also limit cash dividend payments
and additional indebtedness.

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

The Company presently has a facility for sale or lease in Troy, New York.  Due
to  economic conditions and other  factors, the efforts  to sell this property
have not been  successful.  A property  in Pittsburgh, Pennsylvania,  has been
leased on a long-term lease with an option to buy.

Due to the seasonal fluctuation in the Company's working capital needs and the
limitations  on  borrowing,  the  Company  continues  to  exert  careful  cash
controls.   However,  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
anticipated  growth.  The  Company's working capital ratios  were 2.9, 2.1 and
2.2 to  1 at  September 30, 1996,  December 31, 1995  and September  30, 1995,
respectively.   At September 30, 1996, the Company had available $2,050,000 of
unused  credit under  its loan  agreement, plus  cash and cash  equivalents of
$5,400,000.  This compared with $5,274,000 and $4,866,000 of unused credit and
$3,477,000 and $3,956,000  of cash and cash  equivalents at December 31,  1995
and September 30, 1995, respectively.



                          PART II - OTHER INFORMATION
                          ---------------------------


ITEM 5.  ACQUISITION

On July  17, 1996, the  Company acquired  certain assets of  Moore and  Steele
Corporation,  a  manufacturer and  marketer  of lubricator  equipment  for the
railroad  industry.   This  acquisition gives  the  Company the  broadest rail
lubrication product line on a worldwide basis.



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

      (a)  Exhibits:
           ---------

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

      (b)  Reports on Form 8-K
           -------------------

           During  the quarter ended September 30, 1995, the Company
           did not file any reports on Form 8-K.





                                   SIGNATURE
                                   ---------

Pursuant  to the  requirements of  the Securities  Exchange Act  of  1934, the
Registrant has  duly caused this  report to  be signed  on its  behalf by  the
undersigned thereunto duly authorized.

                                               PORTEC, Inc.
                                        -------------------------
                                                Registrant

Dated:  November 11, 1996               By:----------------------
                               
                                           Nancy A. Kindl
                                           Vice President, Treasurer, Secretary
                                           and Chief Financial Officer






                              EXHIBIT INDEX
                              -------------

                                                         
                                                            Page No.
                                                              Within
                                                          Sequential
                                                           Numbering
                                                           System of           
                                                             Exhibit
                                                             -------
Exhibit                     Description
-------                     -----------

  11               Registrant's statement regarding              12
                   computation of per share earnings.