SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement

[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

LUFKIN INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.

1) Title of each class of securities to which transaction applies:
_____________________________________

2) Aggregate number of securities to which transaction applies:
_____________________________________

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): __________
_____________________________________________________________________

4) Proposed maximum aggregate value of transaction: ____________________

5) Total fee paid: _____________________________________________________

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid: ______________________________________________

2) Form, Schedule or Registration Statement No.: ________________________
______________________________________________________________________

3) Filing Party: ________________________________________________________

4) Date Filed: __________________________________________________________

LUFKIN INDUSTRIES, INC.
Lufkin, Texas

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 2, 2001

TO THE SHAREHOLDERS OF LUFKIN INDUSTRIES, INC.

Notice is hereby given that the Annual Meeting of the Shareholders of
Lufkin Industries, Inc., a Texas corporation, will be held at the Museum of East
Texas, 503 North Second, Lufkin, Texas, on the 2nd day of May, 2001, at 9:00
a.m. local time, for the following purposes:

1. To elect four directors to the Company's board to serve until the annual
shareholders' meeting held in 2004 or until their successors have been
elected and qualified;

2. To appoint Arthur Andersen LLP, independent certified public
accountants, as the Company's auditors for the year 2001; and

3. To transact such other business as may properly come before the meeting
or any adjournments thereof.

Only shareholders of record at the close of business on March 30, 2001, are
entitled to notice of and to vote at the meeting.

You are kindly requested to mark, sign, date and return the enclosed proxy
promptly, regardless of whether you expect to attend the meeting, in order to
ensure a quorum. If you are present at the meeting, and wish to do so, you may
revoke the proxy and vote in person.

It is sincerely hoped that it will be possible for you to personally attend
the meeting.

PAUL G. PEREZ
Secretary

April 6, 2001

LUFKIN INDUSTRIES, INC.
601 South Raguet
Lufkin, Texas 75904

PROXY STATEMENT

GENERAL INFORMATION

The accompanying proxy is solicited by the Board of Directors of Lufkin
Industries, Inc. (the "Company") for use at the Annual Meeting of Shareholders
to be held on May 2, 2001, and any adjournments thereof. The annual meeting
will be held at 9:00 a.m. local time, at the Museum of East Texas, 503 North
Second, Lufkin, Texas. When such proxy is properly executed and returned, the
shares it represents will be voted at the meeting in accordance with the
directions noted thereon; or if no direction is indicated, it will be voted in
favor of the proposals set forth in the notice attached to this Proxy Statement.

Each shareholder of the Company giving a proxy has the unconditional right
to revoke his or her proxy at any time prior to its exercise, either in person
at the Annual Meeting of Shareholders or by oral or written notice to the
Company addressed to Secretary, Lufkin Industries, Inc., 601 South Raguet,
Lufkin, Texas 75904, phone number (936) 634-2211. A shareholder entitled to
vote for the election of directors can withhold authority to vote for all
nominees for directors or can withhold authority to vote for certain nominees
for directors. Abstentions from the proposal to elect directors or the proposal
to approve the appointment of independent certified public accountants are
treated as votes against the particular proposal. Broker non-votes on any of
such matters are treated as shares as to which voting power has been withheld by
the beneficial holders of those shares and, therefore, as shares not entitled to
vote on the proposal as to which there is the broker non-vote.

In addition to the solicitation of proxies by use of this Proxy Statement,
directors, officers and employees of the Company may solicit the return of
proxies by mail, personal interview, telephone or facsimile. Officers and
employees of the Company will not receive additional compensation for their
solicitation efforts, but they will be reimbursed for any out-of-pocket expenses
incurred. Brokerage houses and other custodians, nominees and fiduciaries will
be requested, in connection with the stock registered in their names, to forward
solicitation materials to the beneficial owners of such stock.

All costs of preparing, printing, assembling and mailing the Notice of
Annual Meeting of Shareholders, this Proxy Statement, the enclosed form of proxy
and any additional materials, as well as the cost of forwarding solicitation
materials to the beneficial owners of stock and all other costs of solicitation,
will be borne by the Company. The approximate date on which this Proxy
Statement will first be sent to shareholders is April 6, 2001.

QUORUM AND VOTING SECURITIES

At the close of business on March 30, 2001, which is the record date for
the determination of shareholders of the Company entitled to receive notice of
and to vote at the annual meeting or any adjournments thereof, the Company had
outstanding 6,214,485 shares of common stock, $1.00 par value (the "Common
Stock"). Each share of Common Stock is entitled to one vote upon each of the
matters to be voted on at the meeting.

The presence, either in person or by proxy, of holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. A majority vote is required for the election of directors in
Proposal Number 1. Withholding authority to vote for a director nominee and
broker non-votes in the election of directors will not affect the outcome of the
election of directors.

-1-

PROPOSAL NO. 1: ELECTION OF DIRECTORS

The Board of Directors has nominated and urges you to vote FOR the election
of the four directors who have been nominated to serve a three-year term of
office in the 2004 class of directors. Proxies solicited hereby will be so
voted unless shareholders specify otherwise in their proxies. The affirmative
vote of the holders of a majority of the Common Stock present in person or by
proxy at the meeting and entitled to vote is required for approval of this
Proposal.

The Company's Fourth Restated Articles of Incorporation (the "Articles")
divide the Board of Directors, with respect to terms of office, into three
classes, designated as Class I, Class II and Class III. Each class of directors
is to be elected to serve a three-year term and is to consist of, as nearly as
possible, one-third of the members of the entire Board. In accordance with the
Company's Bylaws, the Company's Board of Directors is currently fixed at 10
members.

The term of office of each of the Class I Directors expires at the time of
the 2001 Annual Meeting of Shareholders, or as soon thereafter as their
successors are elected or qualified. Mr. Lollar, Mr. O'Neal, Mr. Trout and Mr.
Wiener have been nominated to serve an additional three-year term as Class I
directors. Each of the nominees has consented to be named in this Proxy
Statement and to serve as a director, if elected.

It is intended that the proxies solicited hereby will be voted FOR the
election of the nominees for director listed below, unless authority to do so
has been withheld. If, at the time of the 2001 Annual Meeting of Shareholders,
any of the nominees should be unable or decline to serve, the discretionary
authority provided in the proxy will be used to vote for a substitute or
substitutes designated by the Board of Directors. The Board of Directors has no
reason to believe that any substitute nominee or nominees will be required.

NOMINEES FOR DIRECTOR

The nominees for Class I Directors, if elected, whose term of office will
expire in 2004, and certain additional information with respect to each of them,
are as follows:

John H. Lollar, Managing Partner of Newgulf Exploration, L.P. Age 62.
Mr. Lollar previously was Chairman, President and Chief Executive Officer
of Cabot Oil and Gas. He became a director of the Company in 1997 and
currently serves as a member of the Audit Committee and the Pension
Committee. He is a director of Plains Resources.

Bob H. O'Neal, formerly President of Stewart & Stevenson Services,
Inc. Age 66. Mr. O'Neal became a director in 1992 and currently serves as
a member of the Compensation Committee and the Nominating Committee.

H. J. Trout, Jr., manager of his own investments. Age 56. Mr. Trout
has been a director of the Company since 1980 and serves as a member of the
Executive Committee, the Nominating Committee and the Pension Committee.

Thomas E. Wiener, attorney. Age 60. Mr. Wiener became a director of
the Company in 1987 and currently serves on the Audit Committee and the
Executive Committee.

-2-

PROPOSAL 2: RATIFICATION AND APPROVAL OF AUDITORS

The Board of Directors proposes the appointment of the firm of Arthur
Andersen LLP as the Company's auditors for the year ending December 31, 2001.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting of Shareholders and will have an opportunity to make a statement if
they desire to do so and to respond to appropriate questions from those
attending such meeting. Arthur Andersen LLP has served as auditors for the
Company since 1958. Their appointment as auditors for the year ended December
31, 2000 was approved by the shareholders at the last annual meeting on May 3,
2000.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors includes four directors who
are independent, as defined by the standards of the New York Stock Exchange.
The Audit Committee assists the Board in overseeing matters relating to the
accounting and financial reporting practices of the Company, the adequacy of its
internal controls and the quality and integrity of its financial statements.
The Audit Committee's functions include making recommendations concerning the
engagement of independent auditors, reviewing with the independent auditors the
plan and results of the auditing engagement, reviewing the scope and results of
the Company's procedures for internal auditing, reviewing professional services
provided by the independent auditors, reviewing the independence of the
independent auditors, considering the range of audit and nonaudit fees and
reviewing the adequacy of the Company's internal accounting controls. In May,
2000, the Board adopted a new Audit Committee Charter, appearing as Appendix A
to this proxy statement. As set forth in the Audit Committee Charter,
management of the Company is responsible for the preparation, presentation and
integrity of the Company's financial statements, and for the procedures designed
to assure compliance with accounting standards and applicable laws and
regulations. The independent auditors are responsible for auditing the
Company's financial statements and expressing an opinion as to their conformity
with accounting principles generally accepted in the United States.

The Audit Committee met two times during the year ended December 31, 2000.
In performing its oversight function, the Audit Committee reviewed and discussed
with management and the independent auditors the interim financial statements as
well as the annual financial statements and the independent auditor's
examination and report on the Company's annual financial statements. The Audit
Committee has discussed with the independent auditors the matters required to be
discussed by generally accepted auditing standards, including those described in
Statement of Auditing Standards No. 61, as amended, "Communication with Audit
Committees," as currently in effect. The Audit Committee has also received the
written disclosure statement from the independent auditors required by
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees." The Committee also discussed with the auditors any
relationships that may impact their objectivity and independence and satisfied
itself as to the auditors' independence.

The Audit Committee reviewed the Company's audited financial statements for
the year ended December 31, 2000, and discussed them with management and the
independent auditors. Based on the review and discussions, the Audit Committee
recommended to the Board that the Company's audited financial statements be
included in its Annual Report on Form 10-K for the fiscal year ended December
31, 2000 for filing with the Securities and Exchange Commission.

-3-

Principal Accounting Firm Fees

The following table sets forth the aggregate fees paid by the Company to
independent auditors during the year ended December 31, 2000:

Audit fees $293,000

Financial Information Systems Design and
Implementation Fees -0-

All Other Fees 446,669
--------
Total $739,669
========

The Audit Committee has considered whether the provision of non-audit
services by the Company's independent auditors is compatible with maintaining
auditor independence.

This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such acts.

The following members of the Audit Committee have delivered the foregoing
report:

L. R. Jalenak, Jr., Chairman
Melvin E. Kurth, Jr.
John H. Lollar
Thomas E. Wiener

-4-

COMPANY INFORMATION

INFORMATION ABOUT CURRENT AND CONTINUING DIRECTORS

Information about Mr. Lollar, Mr. O'Neal, Mr. H. J. Trout, Jr. and Mr.
Wiener can be found above under "Nominees for Director." The Class II Directors
whose present term of office will continue after the meeting and expire in 2002,
and certain additional information with respect to each of them, are as follows:

L. R. Jalenak, Jr., manager of his own investments and a director of
Perrigo Company, Party City Corporation and Dyersburg Corp. He also serves
as an Independent Trustee for First Funds (a family of mutual funds). Age
70. Mr. Jalenak has been a director since 1990 and serves on the
Compensation Committee and Audit Committee.

Henry H. King, manager of his own investments. Age 68. Mr. King
has been a director since 1990 and serves on the Executive Committee and
the Compensation Committee.

W. W. Trout, Jr., retired Vice President of the Company. Age 69.
Mr. Trout has been a director of the Company since 1968 and serves on the
Pension Committee.

Mr. W. W. Trout, Jr. and Mr. H. J. Trout, Jr. are first cousins.

The Class III Directors, whose present term of office as directors will
continue after the meeting and expire in 2003, and certain additional
information with respect to each of them, are as follows:

Douglas V. Smith, President, Chief Executive Officer and Chairman of
the Board of the Company. Age 58. Mr. Smith was elected President and
Chief Executive Officer of the Company in January 1993 and Chairman of the
Board in May 1995. He was also elected as a director in January 1993.

Simon W. Henderson, III, manager of his own investments. Age 67. Mr.
Henderson has been a director of the Company since 1971 and currently
serves as a member of the Compensation Committee, the Executive Committee
and the Nominating Committee.

Melvin E. Kurth, Jr., manager of his own investments. Age 70. Mr.
Kurth has been a director of the Company since 1968 and currently serves as
a member of the Audit Committee and the Nominating Committee.

BOARD COMMITTEES

The Board of Directors has a standing Audit Committee. The Audit Committee
is currently comprised of Messrs. L. R. Jalenak, Jr. (Chairman), M. E. Kurth,
Jr., J. H. Lollar and T. E. Wiener. The Audit Committee's responsibilities and
functions are discussed above under the section entitled "Report of the Audit
Committee" and the Audit Committee Charter is set forth in its entirety as
Appendix A hereto.

The Board of Directors also has a standing Compensation Committee which is
currently comprised of Messrs. B. H. O'Neal (Chairman), S. W. Henderson III, L.
R. Jalenak, Jr., and H. H. King. The functions performed by the Compensation
Committee include: reviewing executive salary and variable compensation;
reviewing the Company's stock option plan (and making grants thereunder); and
approving salary and variable compensation awards to key executives.

-5-

The Board of Directors also has a standing Nominating Committee which is
currently comprised of Messrs. M. E. Kurth (Chairman), S. W. Henderson III, B.
H. O'Neal and H. J. Trout, Jr. The Nominating Committee does not consider
nominees recommended by the shareholders of the Company.

The Board of Directors has a standing Pension Committee which is currently
comprised of Messrs. H. J. Trout, Jr. (Chairman), J. H. Lollar and W. W. Trout,
Jr. The Pension Committee retains, and reviews the performance of, investment
managers, plan consultants and the pension plan trustee. Additionally, the
Pension Committee establishes and reviews asset investment policies and
performance benchmarks to ensure the protection of pension plan assets.

The Board of Directors has a standing Executive Committee. The Executive
Committee is currently comprised of Messrs. D. V. Smith (Chairman), S. W.
Henderson, III, H. H. King, H. J. Trout, Jr. and T. E. Wiener. The function
performed by the Executive Committee is to exercise all the authority of the
Board of Directors in the business and affairs of the Company, except where
action of the Board of Directors is specified by applicable law.

DIRECTORS' MEETINGS AND COMPENSATION

During 2000, the Audit Committee had two meetings, the Compensation
Committee had two meetings, the Pension Committee had three meetings, the
Nominating Committee had one meeting, the Executive Committee had three meetings
and the Board of Directors had four meetings. During 2000 each continuing member
of the Board of Directors attended 75% or more of the meetings of the Board of
Directors and the committees of which he was a member.

During 2000, the directors received $1,000 for each meeting of the Board of
Directors and $1,000 for each committee meeting that they attended in addition
to a quarterly payment of $3,500. In addition, each director receives a 5,000
share stock option grant on the date of his election to the Board of Directors
and options to purchase 1,000 shares each year thereafter as long as he
continues on the Board.

EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of the Board of Directors of Lufkin Industries,
Inc. (the "Committee") is pleased to present the 2000 report on executive
compensation. This report of the Committee documents the components of the
Company's executive officer compensation program and describes the basis on
which the compensation program determinations were made by the Committee with
respect to the executive officers of the Company, including the executive
officers that are named in the compensation tables. The Committee meets
regularly and is comprised entirely of non-employee directors. The duty of the
Committee is to review compensation levels of members of management, as well as
administer the Company's various incentive plans including its annual bonus plan
and its stock option plan. The Committee reviews in detail, with the Board of
Directors, all aspects of compensation for all of the Company's senior officers.

The Committee has retained the services of a national compensation
consulting firm to assist the Committee in connection with the performance of
its various duties. Such firm provides advice to the Committee with respect to
how compensation paid by the Company to its senior officers compares to
compensation paid by other companies. Members of the Committee review
compensation surveys provided by the consulting firm as well as surveys provided
by other sources.

-6-

Executive Compensation Program Philosophy

The design of the Company's executive compensation program is based on
three fundamental principles. First, compensation must support the concept of
pay for performance, that is, compensation awards are directly related to the
financial results of the Company, to increasing shareholders' value, and to
individual contributions and accomplishments. As a result, much of an executive
officer's compensation is "at risk" with annual bonus compensation, at target
levels, amounting to approximately 35% of total cash compensation.

The second principle of the program is that it should offer compensation
opportunities competitive with those provided by other comparable industrial
companies. It is essential that the Company be able to retain and reward its
executives who are critical to the long-term success of the Company's
diversified and complex businesses.

The final principle is that the compensation program must provide a direct
link between the long-term interests of the executives and the shareholders.
Through the use of stock-based incentives, the Committee focuses the attention
of executives on managing the Company from the perspective of an owner with an
equity stake.

Compensation Plan Components

Base Salary. The Committee has established base salary levels for the
Company's executive officers that are generally comparable to similar executive
positions in companies of similar size and complexity as the Company. The
Company obtains comparative salary information from published market surveys and
from a national compensation consulting firm. The comparative data is from
industrial companies of a comparable size in revenue during this period. The
Company's salaries were competitive with the market at the fiftieth percentile
in these comparisons. As part of its responsibilities, the Committee approves
all salary changes for the Company's officers and bases individual salary
changes on a combination of factors such as the performance of the executive,
salary level relative to the competitive market, the salary increase budget for
the Company, level of responsibility and the recommendation of the Chief
Executive Officer. In accordance with its review process, the Committee
approves base salary increases for those officers whose salary level and
performance warranted an adjustment. Base salary increases approved for these
officers in 2000 averaged 4.1%.

Incentive Compensation. The Company's performance, or that of a division
or business unit, as the case may be, for purposes of compensation decisions is
measured under the annual bonus plan against goals established at the start of
the year by the Committee. In each instance, the goals consisted in most part
of making budgeted sales and expense levels, as well as subjective individual
performance goals.

Chief Executive Officer Compensation. Mr. Smith's base salary for 2000
was $375,000 and he received a bonus for the year of $187,500. These amounts
were determined by the Compensation Committee as a part of a three year
employment contract that began on January 1, 1999. The term of the contract
automatically extends for an additional year on each anniversary of the contract
and currently expires on December 31, 2003. The Committee believes that the
contract is competitive and that the employment contract is critical to attract
and retain the best qualified executives.

Stock Options. During 2000, the Committee also made stock option grants
to the CEO and to each of the senior officers of the Company. Each of those
officers received stock options which were based on his responsibilities and
relative position in the Company. In 2000, 77,675 shares of stock options were
granted to the Company's officers which compares to 79,333 shares granted to
officers in 1999. Of the options granted to officers, 61,475 shares of stock
options were granted to Mr. Smith in 2000 compared to 53,333 granted to him in
1999. The Committee's policy is to make stock option grants annually and for
the purpose of tying a portion of the employees' compensation to the long-term
performance of the Company's Common Stock. By making such grants, the Committee
feels that these grants help senior officers' interests coincide with those of
the shareholders.

-7-

No member of the Committee is a former or current officer or employee of
the Company or any of its subsidiaries. The following members of the
Compensation Committee have delivered the foregoing report:

B. H. O'Neal, Chairman
S. W. Henderson III
L. R. Jalenak, Jr.
H. H. King

The foregoing report and the performance graph and related description
included in this proxy statement shall not be deemed to be filed with the
Securities and Exchange Commission except to the extent the Company specifically
incorporates such items by reference into a filing under the Securities Act of
1933 or Securities Exchange Act of 1934.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth information with respect to the Chief
Executive Officer and the four most highly compensated executive officers of the
Company as to whom the total annual salary and bonus for the year ended December
31, 2000 exceeded $100,000:

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
- ---------------------------------------------------------------- -------------
STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) (SHARES) COMPENSATION(2)
- ------------------------------ ---- --------- ------------ --------------- ---------------

Douglas V. Smith.............. 2000 $375,000 $187,500 61,475 $16,938
President and 1999 360,000 - 53,333 16,247
Chief Executive Officer 1998 360,000 - 30,000 24,573

Larry M. Hoes................. 2000 178,000 88,800 4,300 8,082
Vice President 1999 172,800 - 6,000 7,833
1998 172,800 - 4,500 11,479

John F. Glick................. 2000 165,000 37,400 4,300 7,480
Vice President 1999 160,000 - 6,000 8,376
1998 160,000 25,000 4,500 8,494

Scott H. Semlinger............ 2000 156,000 35,600 4,300 8,295
Vice President 1999 147,000 27,000 6,000 8,156
1998 147,000 25,000 4,500 7,500

Paul G. Perez................. 2000 130,000 54,800 3,300 5,922
Vice President 1999 118,000 - 5,000 5,402
1998 118,000 - 3,250 6,876

- ------------------
(1) Annual bonus amounts are earned and accrued during the years indicated, and
paid in the first quarter of the following year.
(2) The All Other Compensation consists of the Company's contribution to the
Thrift Plan.

-8-

STOCK OPTION PLANS

The Company has a stock option plan (the "2000 Plan"), pursuant to which
options to purchase shares of the Company's stock are outstanding. The purpose
of the 2000 Plan is to advance the best interests of the Company by providing
those persons who have substantial responsibility for the management and growth
of the Company with additional incentive by increasing their proprietary
interest in the success of the Company. All options for stock are granted by
the Compensation Committee. The term of the Company's previous stock option
plan (the "1990 Plan") expired in 2000 and no future grants of awards under the
1990 Plan will be allowed. However, awards that have been issued prior to the
expiration of the 1990 Plan but that have not expired will still be honored by
the Company.

The following table shows, as to the Chief Executive Officer and the four
most highly compensated executive officers of the Company, information about
option grants in the last year. The Company does not grant any Stock
Appreciation Rights.

OPTION GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS POTENTIAL
- --------------------------------------------------------------------------------------------- REALIZABLE
VALUE OF ASSUMED
PERCENTAGE OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION
OPTIONS GRANTED TO FOR OPTION TERM
GRANTED EMPLOYEES EXERCISE PRICE EXPIRATION ---------------------
NAME (SHARES)(1) IN 2000 (PER SHARE)(2) DATE 5% 10%
- ----------------------------- ----------- ------------- -------------- ---------- -------- ---------

Douglas V. Smith(3) 61,475 44% $15.25 02/15/2010 589,585 1,494,124
Larry M. Hoes(4) 4,300 3 18.25 10/31/2010 49,353 125,069
John F. Glick(4) 4,300 3 18.25 10/31/2010 49,353 125,069
Scott H. Semlinger(4) 4,300 3 18.25 10/31/2010 49,353 125,069
Paul G. Perez(4) 3,300 2 18.25 10/31/2010 37,875 95,983

- ------------------
(1) The options were granted for a term of ten years subject to earlier
termination in certain events related to termination of employment.

(2) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares or by offset of the underlying
shares, subject to certain conditions.

(3) Options are 1/3 exercisable at time of grant, 1/3 starting twelve months
after the grant date, with full vesting occurring on the second anniversary
date.

(4) Options granted are exercisable starting twelve months after the grant
date, with 25% of the shares becoming exercisable at that time and with an
additional 25% of the option shares becoming exercisable on each successive
anniversary date, with full vesting occurring on the fourth anniversary
date.

There were no option exercises in the last fiscal year by the Chief
Executive Officer and the four most highly compensated executive officers.

-9-

RETIREMENT PLAN

Certain employees of the Company, including its executive officers, are
participants in the Company's Retirement Plan for Salaried Employees (the
"Qualified Plan"). The Qualified Plan is a defined benefit plan, qualified
under Section 401 of the Internal Revenue Code, which provides benefits based on
an employee's years of service and covered compensation. Covered compensation
consists of Salary and Bonus as set forth in the Summary Compensation Table on
page 7 of this Proxy Statement. The benefits are based on the average of the
highest five consecutive years of covered compensation received during the last
ten years of service. Benefits are estimated on straight-life annuity
computations and do reflect offsets for primary Social Security benefits. Under
the Code, the maximum amount of compensation that can be considered by a tax-
qualified plan is $170,000, subject to annual adjustments. In addition, the
Code limits the maximum amount of benefits that may be paid under such a plan.
Accordingly, the Company has adopted an unfunded, nonqualified plan
("Restoration Plan") to provide supplemental retirement benefits to covered
executives. The Restoration Plan benefit is based on the same benefit formula
for the Qualified Plan except that it does not limit the amount of a
participant's compensation or maximum benefit. The Company also maintains an
additional nonqualified plan ("SERP") for Mr. Smith, which credits him with an
additional .5 years of service for each year of service credited to him under
the Qualified Plan. The benefits calculated under the Restoration Plan and SERP
are offset by the participant's benefit payable under the Qualified Plan. The
following table shows the annual benefits payable upon retirement at age 65 for
various compensation and years of credited service combinations under these
plans. Payment of the specified retirement benefits is contingent upon
continuation of the plans in their present form until the employee retires.
Directors who are not, or who have not been, employees of the Company will not
receive benefits under the plans. The years of credited service for the persons
named in the Summary Compensation Table are: Mr. Smith, eight years (plus an
additional four years under the SERP); Mr. Hoes, four years; Mr. Glick, six
years; Mr. Semlinger, 25 years; and Mr. Perez, seven years.

ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
AVERAGE ANNUAL COMPENSATION FOR --------------------------------------------------------------
HIGHEST FIVE YEARS DURING 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
LAST TEN YEARS OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- --------------------------------- ---------- ---------- ---------- ---------- ----------

$ 125,000....................... $ 32,369 $ 43,827 $ 55,286 $ 66,744 $ 66,744
150,000....................... 39,244 52,994 66,744 80,494 80,494
175,000....................... 46,119 62,161 78,202 94,244 94,244
200,000....................... 52,994 71,327 89,661 107,994 107,994
225,000....................... 59,869 80,494 101,119 121,744 121,744
250,000....................... 66,744 89,661 112,577 135,494 135,494
300,000....................... 80,494 107,994 135,494 162,994 162,994
400,000....................... 107,994 144,661 181,327 217,994 217,994

-10-

PERFORMANCE GRAPH

The following performance graph compares the performance of the Company's
common stock to the NASDAQ Market Value Index and to the Media General Oilfield
Services Index (which includes the Company) for the last five years. The graph
assumes that the value of the investment in the Company's common stock and each
index was $100 at December 31, 1995.

December 31,
---------------------------------------------------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----

Lufkin Industries, Inc.... 100.00 113.89 166.99 88.80 75.49 94.17
Oil & Gas Equipment/Svcs.. 100.00 148.50 225.08 115.74 155.25 214.27
NASDAQ Market Index....... 100.00 124.27 152.00 214.39 378.12 237.66

-11-

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2000, no executive officer of the Company served as (I) a member of
the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose executive officers served on the
Board of Directors of the Company, or (ii) a director of another entity, one of
whose executive officers served on the Board of Directors of the Company or its
subsidiaries.

During 2000, no member of the compensation committee (or board committee
performing equivalent functions) (I) was an officer or employee of the Company,
(ii) was formerly an officer of the Company or (iii) had any business
relationship or conducted any transactions with the Company.

EMPLOYMENT CONTRACT AND CHANGE IN CONTROL ARRANGEMENT

The Company has entered into an employment agreement with Mr. Smith that
currently expires December 31, 2003, with a minimum annual salary of $375,000,
subject to review annually by the Compensation Committee. The Company has also
entered into a severance agreement with Mr. Smith that provides for severance
benefits to be paid to him following a change in control of the Company (as
defined) or a termination of his employment. Maximum severance benefits at
December 31, 2000, would be approximately $1,687,500, payable in a lump sum
payment, such amount representing three times the salary and bonus received by
Mr. Smith during the year. Similar agreements were entered into by Messrs.
Hoes, Glick, Semlinger and Perez with maximum severance benefits at December 31,
2000 of approximately $533,600, $404,800, $383,200 and $369,600, respectively.
These amounts represent two times the salary and bonus received by these
individuals during the year.

-12-

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table reflects the beneficial ownership of the Company's
Common Stock as of December 31, 2000, with respect to (I) each person who is
known by the Company to own beneficially more than 5% of the outstanding shares
of the Company's Common Stock; (ii) the directors and nominees for director;
(iii) each executive officer named in the Summary Compensation Table and (iv)
the Company's directors and officers as a group.

NUMBER OF
NAME OF SHARES OWNED PERCENT
BENEFICIAL OWNER BENEFICIALLY(1) OF CLASS
---------------- --------------- --------

Heartland Advisors, Inc........................ 566,600 8.6%
Dimensional Funds Advisors, Inc................ 411,700 6.3
Fidelity Management and Research............... 343,600 5.2
John F. Glick.................................. 23,650 *
Simon W. Henderson, III........................ 81,179 1.2
Larry M. Hoes.................................. 18,770 *
L. R. Jalenak, Jr.............................. 10,400 *
Henry H. King.................................. 11,128 *
Melvin E. Kurth, Jr............................ 74,716 1.1
John H. Lollar................................. 10,000 *
Bob H. O'Neal.................................. 9,500 *
Paul G. Perez.................................. 20,725 *
Scott H. Semlinger............................. 28,355 *
Douglas V. Smith............................... 195,046 3.0
H. J. Trout, Jr................................ 268,926 4.1
W. W. Trout, Jr................................ 16,129 *
Thomas E. Wiener............................... 26,672 *
Directors and Officers as a group (14 persons). 795,196 12.1
- ----------------------
* Indicates ownership of less than one percent of the outstanding shares of
Common Stock of the Company.

(1) Includes shares subject to presently exercisable options.

Each director and nominee for director listed above possesses sole voting
and investment powers as to all the shares listed as being beneficially owned by
such person. The shares listed above include 7,093 shares held in a family
limited partnership over which Mr. Henderson shares investment and voting
control.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons holding more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission ("SEC") and any stock exchange or automated quotation
system on which the Common Stock may then be listed or quoted (I) initial
reports of ownership, (ii) reports of changes in ownership and (iii) annual
reports of ownership of Common Stock and other equity securities of the Company.
Such directors, officers and ten-percent shareholders are also required to
furnish the Company with copies of all such filed reports.

Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required during
2000, the Company believes that all Section 16(a) reporting requirements related
to the Company's directors and executive officers were timely fulfilled during
2000.

-13-

PROPOSALS OF SHAREHOLDERS

A proposal of a shareholder intended to be presented at the next annual
meeting must be received at the Company's principal executive offices no later
than November 30, 2001 if the shareholder making the proposal desires such
proposal to be considered for inclusion in the Company's proxy statement and
form of proxy relating to such meeting. The Company has also adopted Bylaw
provisions which require that nominations of persons for election to the Board
of Directors and the proposal of business by shareholders at an annual meeting
of shareholders must fulfill certain requirements which include the requirement
that notice of such nominations or proposals must be delivered to the Secretary
of the Company not less than 60 days nor more than 90 days prior to the
anniversary of the prior annual meeting. In order to be timely for next year's
annual meeting such notice must be delivered between February 1, 2002 and March
3, 2002. If such timely notice of a shareholder proposal is not given, the
proposal may not be brought before the annual meeting. If timely notice is
given but is not accompanied by a written statement to the extent required by
applicable securities laws, the Company may exercise discretionary voting
authority over proxies with respect to such proposal if presented at the annual
meeting.

ADDITIONAL FINANCIAL INFORMATION

Shareholders may obtain additional financial information for the year ended
December 31, 2000 from the Company's Form 10-K Report filed with the Securities
and Exchange Commission. A copy of the Form 10-K Report may be obtained without
charge by written request to the Secretary, Lufkin Industries, Inc., P.O. Box
849, Lufkin, Texas 75902.

OTHER MATTERS

The Board of Directors has at this time no knowledge of any matters to be
brought before the meeting other than those referred to above. However, if any
other matters properly come before the meeting, it is the intention of the
persons named in the accompanying proxy to vote said proxy in accordance with
their best judgment on such matters.

By Order of the Board of Directors

PAUL G. PEREZ
Secretary

April 6, 2001

-14-

APPENDIX A

AUDIT COMMITTEE CHARTER

I. ORGANIZATION

The Audit Committee is comprised of three outside directors. The members
of the Audit Committee shall meet the independence and experience
requirements of the Nasdaq National Market System (as then required and in
effect). If the Company's securities are quoted on any other market or
listed on any exchange, the Audit Committee shall meet the independence and
experience requirements of such market exchange. The members Audit
Committee shall be appointed by the Board (on the recommendation of the
Nominating Committee).

II. PURPOSE

To assist the Board of Directors in fulfilling its oversight
responsibilities with respect to the following:

1. discussing the financial statements of the Company with management and
the Company's independent auditors;

2. monitoring actions taken by the Company to comply with its internal
policies as well as external accounting, legal and regulatory
requirements;

3. reviewing disclosures regarding independence of the Company's outside
auditors; and

4. evaluating the performance of the Company's independent auditors.

III. RESPONSIBILITIES

A. Provide an open avenue of communication between the internal auditor,
the independent accountants and the Board of Directors.

B. Review and reassess the Committee's charter annually and recommend
changes to the board for approval.

C. Recommend to the Board of Directors the independent accountants to be
nominated and review and approve the discharge of the independent
accountants. The independent accountants are ultimately to be held
accountable to the Board of Directors and the Audit Committee.

D. Receive and review a formal written statement from the independent
accountants delineating any and all relationships between the
independent accountants and the Company. Discuss any disclosed
relationships or services which may impact the independent
accountants' objectivity and independence and take, or recommend that
the Board of Directors take, appropriate action to ensure the
independence of the accountants.

A-1

E. Review the scope and services to be performed by the independent
accountants during the coming year, including a review of the amount
of fees budgeted and paid to the independent accountants.

F. Review with the internal auditor and the independent accountants the
coordination of audit efforts.

G. Review with the independent accountants, the internal auditor and
financial and accounting personnel, the accounting and financial
controls of the Company, which are the responsibility of the
Company's management, and elicit any recommendations for the
improvement of such internal control procedures or particular areas
where new or more detailed controls or procedures are desirable.

H. Review with management and the independent accountants at the
completion of the annual audit or quarterly review:

(a) The Company's financial statements and related footnotes.

(b) The independent accountants' audit / review of the financial
statements and their report thereon.

(d) Other matters related to the conduct of the audit / review which
are to be communicated to the Committee under generally accepted
auditing standards.

I. Review an analysis prepared by management and the independent auditor
of significant financial reporting issues and judgments made in
connection with the preparation of the Company's financial
statements.

J. Review major changes to the Company's auditing and accounting
principles and practices as suggested by the independent auditor,
internal auditors or management.

K. Obtain from the independent auditor assurance that Section 10A
(relating to the detection of illegal acts that may have a direct and
material effect on the determination of financial statement accounts)
of the Securities Exchange Act of 1934 has not been implicated.

L. Obtain reports from management and the independent auditor that the
Company's then-existing subsidiary and foreign affiliated entities
are in conformity with applicable legal requirements.

M. Discuss with the independent auditor the matters required to be
discussed by Statement of Auditing Standards No. 61 relating to the
conduct of the audit.

N. Monitor actions taken by the Company in response to any letters or
reports to management provided by the internal auditors or
independent auditors.

A-2

O. Review the Company's policies with respect to conflicts of interest.

P. Advise the Board with respect to the Company's policies and
procedures regarding compliance with its internal policies as well as
applicable laws and regulations, including without limitation with
respect to maintaining books, records and accounts and a system of
internal accounting controls in accordance with Section 13(b)(2) of
the Securities Exchange Act of 1934.

Q. Review with counsel legal matters that may have a material impact on
the financial statements, the Company's compliance policies and any
material reports or inquiries received from regulators or
governmental agencies.

R. Meet at least annually with the chief financial officer and the
independent auditor in separate executive sessions.

S. Prepare and submit any report required by the Securities and Exchange
Commission for inclusion in the Company's proxy statement.

T. Review with management and the internal auditor:

(a) Significant findings during the year and management's responses
thereto.

(b) Any difficulties encountered in the course of the audits,
including any restrictions on the scope of the audit work or
access to required information.

U. Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this purpose
if, in its judgment, that is appropriate.

IV. LIMITATIONS ON RESPONSIBILITIES AND POWERS

While the Audit Committee has the responsibilities and powers set forth
above in this Audit Committee Charter, it is not the duty of the Audit
Committee:

A. to plan or conduct audits;

B. to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting
principles (this determination shall remain the responsibility of
management and the independent auditor);

C. to conduct investigations;

D. to resolve disagreements, if any, between management and the
independent auditor; or

E. to assure compliance with the Company's internal policies, accounting
rules and other applicable laws and regulations.

A-3

LUFKIN INDUSTRIES, INC.

This Proxy is Solicited by the Board of Directors

The undersigned hereby constitutes and appoints DOUGLAS V. SMITH and PAUL G.
PEREZ, and each or either of them, lawful attorneys and proxies of the
undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned, to attend the annual meeting of shareholders of
LUFKIN INDUSTRIES, INC., (herein the "Company") to be held at the Museum of
East Texas, 503 North Second, Lufkin, Texas, at 9:00 a.m., Lufkin Time, on the
2nd day of May, 2001, and any adjournment(s) thereof, with all powers the
undersigned would possess if personally present and to vote thereat, as
provided below, the number of shares the undersigned would be entitled to vote
if personally present.

1. Election of John H. Lollar, Bob H. O'Neal, H.J. Trout, Jr. and Thomas E.
Wiener to the Company's board to serve until the annual shareholders'
meeting held in 2004 or until their successors have been elected and
qualified.

2. The appointment of Arthur Andersen LLP, independent certified public
accountants, as the Company's auditors for the year 2001.

In accordance with their discretion, said attorneys and proxies are
authorized to vote upon such other business as may properly come before such
meeting or any adjournments thereof.

Every properly signed proxy will be voted in accordance with the
specification made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 and 2. All prior proxies are hereby revoked.

This proxy will also be voted in accordance with the discretion of the
proxies or proxy on any other business. Receipt is hereby acknowledged of the
Notice of Annual Meeting and Proxy Statement of the Company dated April 6,
2001.

____ ____
LUFKIN INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [_]

[ ]

1. Election of Directors. For Withheld For All
Nominees: 01) John H. Lollar, 02) Bob H. O'Neal, All All Except
03) H.J. Trout, Jr. and 04) Thomas E. Wiener [_] [_] [_]

_________________________
Nominee Exception
For Against Abstain
2. To appoint Arthur Andersen LLP as the independent [_] [_] [_]
auditors of the Company for the year 2001.

NOTE: (Please sign exactly as name appears hereon. When signing
as attorney, executor, administrator, trustee or guardian, etc.,
please give full title as such. For joint accounts, each joint owner
should sign.)

Dated: ___________________________, 2001
Signature(s) ________________________________________________
Dated: ___________________________, 2001
Signature(s) ________________________________________________

____ ____
FOLD AND DETACH HERE

PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE