Ferrite inductors are usually made in two parts with mating and air gap surfaces perpendicular to the flux path. In the course of manufacture these surfaces are ground flat, and this machining operation is found to increase the loss factor (L.F.), ( <tex xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">\tan \delta_{r+F})/\mu_{e}</tex> , by up to 33%, measured at a frequency of 100 kHz. It is known that grinding puts the surface of a ceramic into compression, and it is shown that the stress in the surface approaches 700 MN m <sup xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">-2</sup> , decreasing to zero at a depth of 5μm or so below the surface. The permeability in this surface layer is greatly reduced, and so the L.F. is. enormously increased, since tan <tex xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">\delta/\mu = \mu"/(\mu')^{2}</tex> . The mean value of the L.F. in this surface layer is estimated to be about <tex xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">600 \times 10^{-6}</tex> , compared with about <tex xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">1.5 \times 10^{-6}</tex> in the interior. A theoretical expression is derived for the increase in L.F. of an inductor assembly, induced by grinding the surfaces perpendicular to the flux, which accounts quite well for the change observed. Ground surfaces parallel to the flux have virtually no effect on L.F., since little flux penetrates them, but the stresses which they generate in the body of the ferrite influence the temperature factor.