1
                                                                    Exhibit 10.3


[Note: Certain confidential portions of this document have been omitted and
       filed separately with the Securities and Exchange Commission. The omitted
       confidential information is marked throughout the document with an "*"]



April 4, 1996



Mr. Oren Gillette
EATON Corporation
13100 E. Michigan Ave.
Galesburg, MI  49053-9674

Dear Mr. Gillette:

This letter confirms our understanding of future pricing and part sourcing with
Neenah Foundry. The steel scrap surcharge base will be lowered to $130/ton
effective May 1, 1996. An economic increase of 2% to the then effective base
price will be implemented on January 1, 1997, and again on January 1, 1998. Part
sourcing will be as follows:

- --       Current parts and sourcing revisions as noted below, will remain at
         least at the present or established sourcing level thru December 31,
         1998.
- --       Part numbers      *         will be        *          sourced  *    to
         Neenah Foundry.
- --       Part number       *        will be sourced    *      to Neenah Foundry.
- --       Part numbers          *         will be sourced 100% to Neenah Foundry.
         Economics for these parts will remain firm until January 1, 1998.
- --       Part numbers       *        will become 100% sourced to Neenah Foundry.
- --       Additional parts being quoted (including the 404 axle bearing caps and
         adjusters) will be evaluated with intention to source with Neenah 
         Foundry based on pricing that is competitive with viable North American
         Foundries.

We ask that you review our understanding and confirm you concurrence. Eaton
Corporation remains a major customer at Neenah Foundry Company. We desire that
this position erodes no further and appreciate your efforts to afford us
replacement business opportunity.

Sincerely,



William Barrett
General Sales Manager
Industrial Division

djh
cc:   Andy Aylward
      Chuck Perry