SecProbe.io

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Covington & Burling

1330 Avenue of the Americas             New York               Bruce C. Bennett
New York, NY  10019                     Washington             Tel 212-841-1060
Tel  212-841-1000                       San Francisco          BBENNETT@COV.COM
Fax  212-841-1010                       London
WWW.COV.COM                             Brussels

                                                           September  28,  2005

BY  HAND  DELIVERY

Ms.  Angela  Crane
Branch  Chief
Securities  and  Exchange  Commission
Division  of  Corporation  Finance
Station  Place
100  F  Street,  N.E.
Washington,  D.C.  20549

Re:     The  GSI  Group,  Inc.
Form  10-K  for  the  year  ended  December  31,  2004
Filed  April  15,  2005
File  No.  333-43089

Dear  Ms.  Crane:

          On behalf of our client, The GSI Group, Inc. ("GSI" or the "Company"),
this letter responds to the comments raised in your letter of September 14, 2005
regarding  GSI's responses to the staff's initial comment letter, dated June 20,
2005,  on the above-referenced filing (the "2004 10-K").  Each of your September
14,  2005  comments appears below in italics, numbered as in your letter, and is
followed by GSI's response.  Capitalized terms used but not specifically defined
herein  have  the  meanings  set  forth  in  the  2004  10-K.

Form  10-K  as  of  April  1,  2005
-----------------------------------

Note  15.  Business  Combinations,  page  43
--------------------------------------------

1.     Please  refer  to  prior  comment  6.  Please  address  the  following:
-     We  note  that  you  collapsed the accounting for both the acquisition and
sale of FarmPro to record the end result rather than allocate the purchase price
and  then  remove  the  assets  recorded  upon the sale. Please tell us what the
accounting  would  have  been  if  you accounted for the acquisition and sale of
FarmPro  separately.  If  material, please explain why collapsing the accounting
was  appropriate  and  cite  the  accounting  literature  upon which you relied.

          GSI  confirms  that  the  combined accounting treatment of the FarmPro
transaction as reflected in its financial statements produced the same result as
if  the  transaction  had  been  separated into two steps and  purchase and sale
accounting  treatment  had  been  applied.  Therefore,  there  is  no  material
difference  between  these  two  approaches  to  the accounting treatment of the
transaction.

          GSI  collapsed  the accounting for the acquisition and sale of FarmPro
to  reflect  the economic substance of the transaction.  GSI did not acquire any
interest  in FarmPro until it had located a purchaser for the assets of FarmPro,
and  GSI's  acquisition  did  not  occur  until  the  resultant  sale  was fully
negotiated  so  that  the  two steps occurred sequentially with no lapse of time
between  them.   As  such,  GSI  did  not bear any of the attributes or risks of
ownership of FarmPro, other than the ownership of the corporate entity, which is
devoid  of  any  assets.
                                        1
<PAGE>
          As  described  in  our  initial  response  letter,  FarmPro had been a
customer  of GSI's, but had become an unacceptable credit.  The business purpose
for  this transaction was to effect a restructuring of FarmPro so that GSI could
continue  to  sell product that had previously been sold to FarmPro, but instead
to  an  entity  that  was  able  to  pay  for  its  purchases.

-     In  addition, please explain in further detail how you valued and recorded
the acquisition of FarmPro. Demonstrate that your accounting complied with GAAP.
We  refer  to  paragraphs 35-46 of SFAS 141. Please provide us with a historical
balance  sheet  of  FarmPro  immediately  prior  to the acquisition as well as a
condensed  balance  sheet disclosing the amount assigned to each major asset and
liability  caption.

     As  the  transaction was pass through in nature, with no significant assets
or  liabilities of FarmPro remaining with GSI, the allocation provisions of SFAS
141  paragraphs  35  -  46  were  not applicable.  We note that this transaction
resulted  in a loss for GSI on accounts receivable of $2,617,900 and loss on its
performance  guarantee  (for FarmPro) of $4,500,000, each as noted in our August
11, 2005 response.   Following consummation of the FarmPro transaction, the only
amounts  remaining  on  GSI's balance sheet from the transaction were a $200,000
receivable  from  the  buyer  and  less  than  $10,000  of other net assets.  An
unaudited  internally prepared balance sheet of FarmPro as of December 22, 2004,
prior  to recording sales of the assets, is attached.  We note that this balance
sheet  was  prepared  by  management  of FarmPro, and neither GSI nor any of its
advisors  take  any responsibility for the accuracy of the information contained
therein.

-     Please  clarify for us the purchase price of FarmPro, including the number
of shares of equity interests issued or issuable and the value assigned to those
interests,  if  applicable.

          Pursuant  to the terms of the Stock Purchase and Settlement Agreement,
dated  December  22, 2004, relating to the FarmPro transaction, on that date GSI
acquired  2-1/2 shares of common stock of FarmPro, representing all of FarmPro's
issued  and  outstanding  common stock, for a purchase price of $165,000.00.  As
noted in the Whereas clauses of the Stock Purchase Agreement, that agreement was
entered  into  in  contemplation  of the substantially concurrent entry into the
Asset  Sale  Agreement between GSI and Hog Slat pursuant to which Hog Slat would
acquire  substantially  all  of the assets of FarmPro.  Therefore, since GSI did
not  intend to acquire FarmPro as a going concern, and since GSI incurred a loss
on the transaction taken as a whole, no value was assigned by GSI to the FarmPro
common  stock  that  it  acquired.

     For  your  convenience,  we  have  included  a  copy  of the Stock Purchase
Agreement  with this letter.  We note that both the Stock Purchase Agreement and
the  Asset  Purchase  Agreement  (which  was  provided to you with the Company's
August  11,  2005  response  letter) were filed by GSI as exhibits to its Annual
Report  on  Form  10-K  for  the  fiscal  year  ended  December  31,  2004.

-     We  note  your  computation  of significance for FarmPro, Inc. included in
Annex A. Please provide a detailed computation for the income test. Also, we see
that  the transactions occurred on December 22, 2004, therefore, it appears that
the  significance tests should be based upon the most recent annual consolidated
financial  statements  filed at or prior to the date of acquisition, or December
31, 2003. Refer to Rule 3-05(b)(3) of Regulation S-X for guidance. Please revise
your  calculations accordingly to comply or tell why your current calculation is
appropriate.

     The  portion  of  Annex  A  referred to in your comment has been revised to
include  the income test for December 31, 2004 and all Rule 3-05(b)(3) tests for
December 31, 2003.  The revised Annex is attached to this letter.  At each date,
the  acquisition  of FarmPro represents less than 20% of the combined total, and
thus  FarmPro is not a significant acquisition under Rule 3-05 of Regulation S-X
at  either  date.  In  addition,  GSI  notes  that  the  impact  of  the FarmPro
transaction  on GSI's results of operations and financial condition for the 2004
fiscal  year  was  immaterial.

                                        2
<PAGE>

Form  10-K  as  of  April  1,  2005
-----------------------------------

Note  18.  Restatement,  page  45
---------------------------------

2.     We  see  that you have made adjustments in 2004, 2003 and 2002 to expense
warranty  and research and development costs, which were erroneously included in
inventory.  Please  clarify for us how this adjustment results in an increase to
net  income.

          The  cumulative  amount  of  the warranty and research and development
expenses  erroneously  included in inventory was determined to be as follows: at
December  31,  2004  it was $786,000; at December 31, 2003 it was $1,440,000; at
December  31,  2002  it was $883,000; and, at December 31, 2001 it was $934,000.

          The  amount  required  to adjust the previously reported income in any
year  is  determined  by  calculating  the  change  from  year  to  year  of the
erroneously  capitalized  amounts.  The  following  chart  may  be  helpful.
<TABLE>
<CAPTION>

                                                                     2004    2003    2002
                                                                    ------  -------  -----
<S>                                                          <C>    <C>     <C>      <C>
Costs capitalized at the beginning of the year, that
should have been expensed in the prior year (debit
retained earnings). . . . . . . . . . . . . . . . . . . . .  A      $1,440  $  883   $ 934

Costs capitalized at the end of the year, that should have
been expensed in the current year (credit inventory). . . .  B      $  786  $1,440   $ 883
                                                                    ------  -------  -----

Increase (decrease) to current year income. . . . . . . . .  A - B  $  654   ($557)     51
                                                                    ======  =======  =====
</TABLE>

          An  increase  to  income  in  any period comes about when the required
cumulative  adjustment  to  inventory  at the end of the period is less than the
required  cumulative  adjustment  to  inventory  at  the  beginning of a period.
Examples  of  this  are  the  years  2004  and  2002  above.

3.     Also,  provide us with further details regarding your corrections related
to  overhead  allocations,  including  the  nature of the issues identified, the
effect  these  inventory  adjustments  had  on  other accounts (i.e. tell us the
corresponding  debits  and  credits)  and  how  these adjustments resulted in an
increase  to  net  income  in  2004  and  2003  but  a  decrease  in  2002.

          Inventory  was  recorded  at  cost,  with cost consisting of material,
labor  and  overhead.  The  Company's  policy  is  to  apply  overhead  costs to
inventory  based  upon  the  direct labor costs that are contained in inventory.
Normally,  the  overhead  application  rate  should  equal  the  actual incurred
overhead  rate  (i.e.,  total  overhead  cost pool divided by total direct labor
dollars  incurred for any given period).  This was not the case, however, as the
inventory  balances  for the 2001 through 2004 year-ends included overhead costs
that  were  applied  to  inventory  on the basis of rates that were in excess of
actual  costs  incurred.

          The  cumulative  amount  of the overhead costs erroneously included in
inventory  was  determined  to  be  as  follows:  at  December  31,  2004 it was
$2,565,000;  at December 31, 2003 it was $4,753,000; at December 31, 2002 it was
$6,530,000;  and,  at  December  31,  2001  it  was  $3,579,000.

                                        3
<PAGE>

          The  amount  required  to adjust the previously reported income in any
year  is  determined  by  calculating  the  change  from  year  to  year  of the
erroneously  capitalized  amounts.   The  following  chart  may  be  helpful.

<TABLE>
<CAPTION>

                                                                     2004    2003     2002
                                                                    ------  ------  --------
<S>                                                          <C>    <C>     <C>     <C>
Costs capitalized at the beginning of the year, that
should have been expensed in the prior year (debit
retained earnings). . . . . . . . . . . . . . . . . . . . .  A      $4,753  $6,530  $ 3,579

Costs capitalized at the end of the year, that should have
been expensed in the current year (credit inventory). . . .  B      $2,565  $4,753  $ 6,530
                                                                    ------  ------  --------

Increase (decrease) to current year income. . . . . . . . .  A - B  $2,188  $1,777   (2,951)
                                                                    ======  ======   =======
</TABLE>

          An  increase  to  income  in  any period comes about when the required
cumulative  adjustment  to  inventory  at the end of the period is less than the
required  cumulative  adjustment  to  inventory  at  the  beginning of a period.
Examples  of  this  are  the  years  2004  and  2003  above.

4.     We  note as part of the acquisition you recorded a "step-up" of inventory
of  $5.3  million.  Please  explain  why  this  was appropriate given the recent
restatements  in  inventory.  Tell us the facts and circumstances of this charge
and  the  nature  of  the  inventory  to  which  it  relates.

          As  discussed  in  the responses to 2 and 3 above, the restatements in
inventory  were required because previously reported inventory balances included
inappropriately  capitalized amounts. These restatements pertained to previously
reported inventory balances as of December 31, 2001 through  April 1, 2005.  The
restated  balances  of inventory were, after the restatements, properly reported
at  the  lower  of  cost  or  market  value.

          As  part  of  the  acquisition we were required by SFAS 141, paragraph
37c,  to  record  the  acquired  inventory  at  fair value as of the date of the
acquisition.(1)  The $5.3 million "step-up" of  inventory  reflects  the  amount
that  fair  value  exceeded  the  historical  cost  of  inventory at the time of
acquisition.

(1)Paragraph 37c of SFAS 141 provides the following general guidance for valuing
inventories acquired:
(1)  Finished goods and merchandise at estimated selling prices less the sum  of
(a) costs of disposal and (b) a reasonable  profit  allowance  for  the  selling
effort of the acquiring entity; (2) Work in process at estimated selling  prices
of finished  goods less the sum of (a) costs to complete, (b) costs of disposal,
and  (c) a reasonable profit allowance for the  completing  and  selling  effort
of the acquiring entity based on profit for similar finished goods; and, (3) Raw
materials at current replacement costs.

                                        4
<PAGE>
Form  10-Q/A  for  the  quarterly  period  ended  July  1,  2005  (the "10-Q/A")

Note  2.  Acquisition  and  Financing  Transactions,  page  8
-------------------------------------------------------------

5.     We  understand that on May 16, 2005 GSI Holding purchased for cash all of
the  issued and outstanding shares of the company's common stock. Please provide
a  schedule  of  the  ownership  interest in GSI Holdings after the acquisition.
Also,  explain  what  the  $2.3  million in minority interest as of July 1, 2005
relates  to and why you believe your current accounting is appropriate. Refer to
EITF  88-16  and  SFAS  141  as  necessary.

          The  current  equity  ownership  of  GSI  Holdings is as follows (each
entity  is an entity of Charlesbank Capital Partners LLC unless noted otherwise;
total  exceeds  100%  due  to  rounding):

     ENTITY                                               %  OWNERSHIP
     ------                                               ------------

Charlesbank  Equity  Fund  V,  Limited  Partnership            83.5%
CB  Offshore  Equity  Fund  V,  L.P.                           11.8
Charlesbank  Equity  Coinvestment  Fund  V,  L.P.               1.2
Charlesbank  Coinvestment  Partners,  Limited  Partnership      0.1
Additional  investors  unaffiliated  with  Charlesbank          3.5
                                                               -----
                                                    Total     100