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                                                                   EXHIBIT 10.40


CONFIDENTIAL

March 23, 1998

Mr. Thomas V. Gilboy
44 Benjamin Street
Old Greenwich, CT 06870   VIA OVERNIGHT COURIER

Dear Tom:

DeVlieg-Bullard, Inc. (DBI) is pleased to offer you the position of Vice 
President and Chief Financial Officer (CFO) of the Corporation.

The CFO's main functions are to plan for, obtain, and use funds to maximize the 
value of the firm. This function involves several important activities.

     First, the CFO is responsible for planning and forecasting, and for looking
     ahead and interacting with the executives who are accountable for the
     general planning activities of the firm.

     Second, the CFO is responsible for optimizing investment and financing 
     decisions and their interactions.

     Third, the CFO is responsible for interacting with the operational and
     other parts of the business to help the firm operate as efficiently as
     possible. The CFO is responsible for all aspects of operational and
     financial control.

     Fourth, the CFO is responsible for linking the firm to the financial
     markets in which funds are raised and in which the firm's securities are
     traded.

In sum, the central responsibilities of the CFO relate to planning, decisions 
on investments, operational and financial control, and how the firm's needs are 
financed. In performance of these functions, the CFO's responsibilities have a 
direct bearing on the key decisions affecting the value of the firm.

The terms and conditions of the offer are as follows:

     1.   Start Date               April 17, 1998

     2.   Base Salary              $160,000 per year paid semi-monthly

     3.   Bonus Potential          Fifty percent of your base pay

     4.   Stock Options            100,000 shares of DBI common stock will be
                                   awarded to you at the option price set by
                                   the closing price per share on March 10, 1997
                                   (2 3/4) as approved by the Board of 
                                   Directors, in accordance with and pursuant 
                                   to the terms of the DBI 1989 Employee Stock 
                                   Plan. You shall vest in 30%; 30% and 40% 
                                   annual increments commencing one year from 
                                   the date of grant. The options shall 
                                   terminate ten years from the date of grant.
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Thomas V. Gilboy
March 23, 1998
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       5.   Benefits                      You will be eligible for the employee 
                                          benefits outlined in the DBI "Your 
                                          ChoiceComp Plan Benefits Workbook"
                                          (provided under separate cover).  No
                                          pre-employment physical is required 
                                          for enrollment in the ChoiceComp Plan

                                          Details of the Split Dollar insurance
                                          program will be forwarded to you under
                                          separate cover.

                                          Vacation allowance will be three weeks
                                          per year.

       6.   Automobile                    You will participate in the Company 
                                          Car Program and receive a leased 
                                          automobile.

       7.   Severance/Change in
             Control                      On December 14, 1995, the Compensation
                                          Committee of the Board of Directors 
                                          approved one year of severance 
                                          compensation for the CFO position in
                                          the event of termination without cause
                                          or as a result of a change in control.

The position will be located in Westport, Connecticut and you will report to me.

We are excited about the future of DeVlieg-Bullard, Inc. and look forward to 
your contribution to the company.

If this offer is acceptable to you, please indicate your acceptance by signing 
below and returning a copy to DBI.

Sincerely,



/s/ William O. Thomas
Chief Executive Officer









Accepted by:  /s/ Thomas V. Gilboy
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Date:  3-24-98
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