A method for removing electrical runout in a machine shaft is disclosed. Electrical runout relates to electrical irregularities which can result from non-uniform electrical properties of the materials of the observed surface. A non-contacting eddy current proximity transducer is to be utilized and in which such a non-contacting eddy current proximity transducer is positioned to sense the portion of the shaft from which electrical runout is to be removed. The output of the transducer is sensed to provide an indication of the electrical runout to ascertain where the electrical runout is high and low as the shaft is rotated. The portions of surface of the shaft where the electrical runout is high is cold worked to change the resistivity and permeability of the observed material and bring electrical properties of the worked area in line with adjacent areas to cancel or to remove the electrical runout. In the apparatus, means is provided which performs a peening operation on the shaft to cold work the same.