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SEC Letter

 August 11, 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 June 20, 2005 regarding the above-referenced filing (the “2004 10-K”). Each of your 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.

 As we have discussed, since prior to the receipt of the Staff’s comment letter, the Company has been diligently evaluating whether a restatement of
its financial statements was necessary in light of past errors that have been discovered by new management. This has delayed the Company’s ability to respond to the Staff’s comments. As described in greater detail below, the Company, in
conjunction with its independent auditors, BKD, LLP, has now determined that a restatement is required. A Form 10-K/A for the period ended December 31, 2004 will be filed on or before August 12, 2005. A Form 10-Q/A for the period ended April 1, 2005
will also be filed to reflect the restatement of the Company’s financial statements for such period.

 Form 10-K for the year ended December 31, 2004

 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 14

 Liquidity and Capital Resources, page 17

1.
We note the significant inventory and accounts receivable balances at December 31, 2004. Please discuss these balances and their related turnover/collection rates on a
comparative basis and the reasons for the significant increases in the current year. Also, explain the basis of your conclusions regarding the recoverability of inventory and accounts receivable as of the most recent balance sheet date.

 Inventory - Restatement

 GSI’s 2004 Form 10-K reported an inventory balance as of
December 31, 2004 of $53.6 million. On July 12, 2005 the Company filed a Current Report on Form 8-K reporting management’s determination that the reported inventory balance may contain material errors which could require a restatement of
historical results.

 Ms. Angela Crane

 August 11, 2005

 Page 2

 The Company, in conjunction with its independent auditors, BKD, LLP, has now determined that a restatement is necessary to correct for historical errors
in inventory accounting. The identified errors relate to three separate issues: i) capitalization rates of overhead expense in inventory, which were inconsistent with actual spending; ii) the capitalization of warranty and R&D costs in
inventory, which management believes should have been expensed in their entirety; and iii) improper application of the Company’s policy for establishing reserves for slow moving inventory, which resulted in inadequate historical reserve levels.
The Company has determined that the cumulative impact of the restatement on the year-end inventory balance is approximately $4.9 million. GSI intends to file the details of this restatement in a report on Form 10-K/A for the year ending December 31,
2004 on or before August 12, 2005.

 Inventory –
General Discussion

 On a restated basis, GSI has
determined that its year end inventory balances for the fiscal years ending December 31, 2004 and December 31, 2003 were as follows (in thousands):

2004

2003

 Raw materials

$
22,786

$
13,653

 Work-in-process

7,581

14,843

 Finished goods

18,196

13,889

48,653

42,385

 These balances
represent inventory turnover rates of 4.6x and 4.4x in 2004 and 2003, respectively. From 2003 to 2004, on a restated basis, total inventory increased by 15%, while cost of goods, on a restated basis, increased by 19%. A more specific discussion of
the year over year change in the components of inventory follows:

(a)
Raw materials: Raw material inventory increased 67% from 2003 to 2004. This was driven by i) growth in sales driven by favorable trends in GSI’s end markets (which management
expects to continue in 2005); and ii) opportunistic purchases by management of raw materials during the 4th quarter
in anticipation of rising steel costs in 2005.

(b)
Work-in-process: Work-in-process inventory decreased by 49% during the year as a result of continuing implementation of lean manufacturing techniques as well as improved tracking
and monitoring of work in process inventory in GSI’s plants.

(c)
Finished goods: Finished goods inventory increased 31% during the year. This was mainly attributable to sales growth during the year.

 For a discussion on the Company’s policy for reserving for slow moving
and obsolete inventory, please see the answer to your Comment 3 below.

 Accounts Receivable

 Accounts
Receivable decreased from $27.1 million in 2003 to $24.7 million in 2004. This represented 42 days of sales outstanding in 2003 and 30 days of sales outstanding in 2004. The Company offers payment terms to its customers ranging from 30 to 90 days,
depending on the circumstance. As of the end of 2004, the aging of the Company’s gross trade receivable balance was substantially similar to the aging as of the end of 2003.

 Ms. Angela Crane

 August 11, 2005

 Page 3

 Historically, the Company has experienced collection rates of approximately 99% of sales.

 The change in the Company’s accounts receivable balance from 2003 to 2004 was attributable to a combination of the
following factors:

(a)
FarmPRO, Inc. Receivable Write Off: GSI wrote off $2.6 million in accounts receivable from FarmPRO, Inc. in 2004 the majority of which was recorded in 2003 or prior years, in
connection with their restructuring and subsequent sale (see the Company’s answer to your Comment six below.).

(b)
Reversal of YCII Receivable Reserve: In 2004, GSI reversed $0.4 million of a reserve that the Company recorded in 2003 in respect of amounts receivable from YCII, a customer with
whom GSI has a dispute relating to a grain facility erection project begun in 1998.

(c)
Other: In 2004, GSI shifted a significant number of international accounts to prepay only accounts, in order to reduce bad debt expense. Furthermore, GSI improved its collection
policies relating to certain of its product lines, in particular the transport augers, which contributed to a decrease in days outstanding.

(d)
Increase in Reserve for Doubtful Accounts: GSI’s reserve for doubtful accounts increased to $3.4 million during the fiscal year 2004 from $2.7 million in 2003.

 As of December 31, 2004, GSI’s allowance
for doubtful accounts represented 12% of gross trade receivables. This allowance is determined quarterly by management through a review of individual account payment activity. The Company has reviewed the allowance recorded as of December 31, 2004
and considers it to be a fair and adequate representation of the general recoverability of GSI’s trade receivables.

 Financial Statements

 Report of Independent Registered Public Accounting Firm – Page 23

2.
Please provide us with a copy of the signed audit opinion. Please ensure future filings include a properly signed audit opinion from your auditors.

 A copy of the signed audit opinion is enclosed. GSI hereby
confirms that it will include in future filings a properly signed audit opinion from its auditors.

 Note 2. Summary of Significant Accounting Policies, page 31

 Inventories, page 32

3.
Tell us more about your reserves for obsolete or slow moving inventory. Tell us the method of measuring inventory obsolescence. If your policy is different for inventory items
and categories, please explain.

 As of
December 31, 2004, the Company’s policy for reserving for obsolete or slow moving inventory was to accrue reserves in the amount of the excess of amounts on hand over the trailing 36 month sales volumes for all finished goods and work in
progress inventory, unless such excess amounts relate to newly introduced SKUs for which the Company has no long term sales history, in which case no reserve is applied. The Company did not have in place a policy for reserving for raw material
inventory.

 Ms. Angela Crane

 August 11, 2005

 Page 4

 On July 8, 2005, management determined that the slow moving inventory reserve carried on the balance sheets for the years ending December 31, 2004, 2003,
and 2002 (and the quarterly periods contained therein) as well as for the quarter ending March 31, 2005, were inconsistent with amounts derived by the application of this methodology.

 Pursuant to this discovery, the Company issued a current report on Form 8-K on July 12, 2005, communicating its intention to
restate prior period financials for this error, if necessary and stating that the Company’s previously issued financial statements should not be relied upon. Subsequently, management has determined that a restatement is necessary to correct for
errors therein. As noted above, the Company will file a Form 10-K/A incorporating such restatement; additionally, a Form 10-Q/A for the quarter ending March 31, 2005 will be filed correcting for the same errors in that period. The cumulative balance
sheet impact as of December 31, 2004 of the restatement of the obsolete and slow moving inventory reserve is approximately $1.6 million.

 Note 10. Employee Benefit Plans, page 38

4.
Please tell us where the non-recourse promissory notes are recorded in your financial statements. Discuss the consideration given to reflecting the advances to stockholders as a
reduction of stockholders’ equity. If the stockholders’ stock is collateral for the advance, it appears that the amount should he reflected as a reduction of equity. See the related guidance in SAB Topics 4E and 4G. Please advise.

 The non-recourse promissory notes described on
page 38 of the 2004 10-K were issued by GSI’s former majority stockholder, Craig Sloan, as consideration for stock purchased by certain management members from him. GSI was not a party to these transactions. As such, the Company does not
consider SAB Topics 4E and 4G to be applicable, and the Company did not record the promissory note balances on its balance sheet. On the balance sheet, GSI accounted for the share ownership pursuant to these transactions under APB Opinion No. 25 and
credited Paid In Capital by the amount of compensation expense charged against net income.

 Note 12. Commitments and Contingencies, page 41

5.
We note that Rabobank International is entitled to a success fee if the company is sold in the next twelve months. Since the company is being sold to Charlesbank Equity Fund,
please tell us the amount of the success fee and if it was accrued as of the balance sheet date.

 On October 5, 2004, GSI entered into a letter agreement (the “Rabobank Agreement”) with Rabobank International. The Rabobank Agreement entitled
Rabobank to, among other things, a success-based fee upon the consummation of a transaction in which all or a portion of the shares of GSI or all or a majority of its assets are transferred to another person or entity (a “Transaction”).
The amount of the success-based fee payable to Rabobank was determined based on the aggregate valuation of the consummated Transaction.

 Ms. Angela Crane

 August 11, 2005

 Page 5

 On April 6, 2005, the stockholders of GSI entered into an agreement (the “Purchase Agreement”) with an affiliate of Charlesbank Equity Fund V,
Limited Partnership, to sell all of the outstanding stock of GSI. The valuation of the stock sale contemplated in this agreement was subject to adjustment for, among other things, dividends and seller transaction expenses. The consummation of the
transaction was contingent on numerous events, including the satisfactory receipt of public market financing, the absence of material adverse changes, and the satisfactory completion of employment agreements with nine of the top 13 senior managers
of the Company.

 On May 16, 2005, Rabobank was paid $2.8
million in consideration for the sale on the same date of all of the outstanding stock of GSI pursuant to the Purchase Agreement.

 No amounts in respect of the Rabobank Agreement were accrued on GSI’s balance sheet as of December 31, 2004, as management considered the amounts due
to be contingent in nature and a Type II Subsequent Event (not a Type I Subsequent Event), requiring footnote disclosure only. In particular, the Company considered the fact that the transaction was highly contingent in nature until three days prior
to the closing due to the buyer’s contingency clause relating to the successful consummation of a public market debt financing. Subsequently, the amount due to Rabobank was recorded by the Company as a charge to S,G&A..

 Note 15. Business Combinations, page 41

6.
We noted that you acquired the outstanding shares of FarmPro on December 22, 2004 and subsequently sold it for a loss of $7.2 million prior to December 31, 2004. Please respond
to the following:

•

Explain in detail how you valued and recorded the acquisition and subsequent sale. Demonstrate that your accounting complied with GAAP.

•

We assume that the acquired company does not meet the significance criteria set forth under Rule 3-05 of Regulation S-X. Please confirm and provide all supporting
calculations.

•

Tell us the business purpose of the simultaneous purchase and sale of FarmPro. Explain any relations between you, your shareholders and FarmPro.

•

Tell us the nature and how you determined the fair value of the assets retained and liabilities assumed. Clarify if amounts are in thousands.

•

Tell us the nature and the accounting for the $4.5 million guarantee for FarmPro.

 We may have additional comments after reviewing your response.

 Business Combination

 On December 22, 2004, GSI participated in two simultaneous transactions that ultimately resulted in the sale of FarmPro, Inc. to an
unrelated third party. The transaction was governed by and recorded under FAS 141, Business Combinations. The details of the transaction were outlined in an Asset Purchase Agreement between the three parties dated December 22, 2004.

 Ms. Angela Crane

 August 11, 2005

 Page 6

 The essential elements of the transaction were the acquisition of 100% of the common stock of FarmPro, Inc. by GSI, the write-off of the accounts receivable due GSI from FarmPro, Inc., the performance by GSI under a
guarantee of the line of credits facility for FarmPro, Inc. and the sale of the majority of assets of FarmPro, Inc. to the unrelated third party. Because of the nature and effect of the transaction, one must collapse the accounting together to
record the end result rather than allocate the purchase price and then remove the assets recorded upon the sale.

 The assets and liabilities were ultimately valued at their fair market value as determined by the negotiations between a willing buyer and a willing seller. The balance
sheet of FarmPro, Inc. detailing the assets and liabilities as of December 22, 2004 was the basis for recording the transaction.

 As part of the agreement, the buyer was allowed to hold back $250,000 of the purchase price for a 12-month period for items as outlined in the agreement. Additionally,
GSI agreed to pay 5% of every account receivable collected by buyer to cover the cost of the collection effort.

 For all work in progress as of the date of closing, GSI and the buyer, under terms of the agreement, will split any profit upon completion. However, due to the
uncertainty of this gain contingency, nothing was recorded on the books of GSI.

 In simple terms, the transactions resulted in the following:

 Loss from performance under guarantee

$
4,500,000

 Loss from accounts receivable write off

2,617,900

 Loss from expenses paid, net of proc