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Contents >
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Message from the President
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Strategy and Outlook A Key Year
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Organization Orientation by Business
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Corporate Responsibility Commitment and Ethics
4
Innovation Distinguishing Mark
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Customers and Solutions Markets
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Social Commitment Team
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Message from the CEO
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Context
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New Companies and Partnerships
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New Management Model
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Featured Projects
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Projects
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Performance
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The Group Performance
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Participation in Professional Organizations and Associations
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46
Health and Safety
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26
Quality and Sustainability
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48
Training
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33
49
Work-Life Balance
50
Community Support
51
The year 2010 can be considered the year during which the trend in the world economy changed. The crisis is still ongoing, especially in Europe and, to lesser degree, in the United States. Other areas, such as Latin America and Asia, are growing at a very fast pace. Our business has been impacted by this situation. However, as in all sectors, the market is also affected (in addition to the general economic situation) by specic variables that evolved in 2010. Governmental backing of infrastructure investments and the electricity tariff regulation, support for investment in renewable energies, the rise of the Smart Grid, and the search for energy efciency in the current grids are factors that stimulate growth in our business. Capital investment has varied country. In Europe, and specically in Spain, the economic situation and lack of clear regulation regarding renewable generation and electricity tariffs have hindered investment. In other countries, primarily the so-called emerging economies, there is a denite commitment to investment in electrical infrastructure, renewable generation, and the refurbishment of the grid. Within this context, just as in previous years, the effort towards globalization combined with geographic and business diversication has made it possible to not only escape the current crisis that is affecting many companies in Spain, but also to close a nancial year with highly satisfactory results. With a view to keeping our growth path sustainable, in 2010 we developed a strategic plan that will guide our operations over the next four years. It is a course that we hope will strengthen our position as a leading company in our target markets. In a global corporate environment as competitive as todays, none of this can be achieved without a rm commitment to innovation, competitiveness, quality, and service. Innovation has always been a key part of our strategy and as a result, we have been able to expand our operations and product offering. During this new phase, with technological changes on the horizon, innovation is even more important. The Arteche Technology Center and the Groups new technology plan are the essential tools for continued growth in products and solutions and for taking advantage of the new opportunities that arise in our sector. In this new cycle that we are beginning in 2011, the people who comprise ARTECHE are indispensible for our continued growth and our ability to adapt to the tasks and changes we will face. We have signicant challenges ahead that will require a comprehensive outlook, conviction, effort, and on occasion, sacrice. I am condent that if we work with the same ambition, attitude, and perseverance that we have demonstrated up to now, we will be successful.
2010, Inguide ourwe developed a strategic plan that will operations over the next four years. It is a course that we hope will strengthen our position as a leading company in our target markets
Within a general context of crisis and economic difculties for most business sectors, 2010 has been a key year for the future of the ARTECHE Group. The obtained results show that our commitment to globalization and innovation has achieved the desired outcome. Thanks to this strategy, based on anticipation, we have been able to strengthen our position of competitiveness and create the basis for becoming established in our markets and facing other challenges with condence, both geographically as well as in relation to products and services. The gures speak for themselves. We have grown 25%, both with regard to orders and sales, and we have seen a 35% improvement in protability, thus establishing a path of sustained growth and a solid nancial position. The main drivers of our growth have been South America and, more moderately, North America and Europe. We have taken advantage of the optimal time to invest in countries like Brazil and Mexico, but our market share has also grown in Europe and America. In addition, in 2010, very important innovation projects have been planned for our future, like the acquisition of new capabilities in optical measurement technology and the launch of our new solution lines for the future Smart Grid. There have also been corporate projects, like the establishment of our activity related to turn key solutions as an independent company in Brazil, our partnership with the Japanese company Nissin Electric to manufacture transformers for gas-insulated switchgear substations, our entry into Chile, and the reorganization of our operations in China. But 2010 is now in the past. The foundation that has been created during recent years has made it possible for us to face the future with optimism. However, we must do so with the same ambition and decisive spirit that has characterized us up to now. We must be watchful of the threats and opportunities that arise in our markets, identifying the areas of improvement and the lines which will make it possible for us to continue growing in a protable and sustainable manner.
2011 with a new organization We beginbusiness and with a new corporate oriented by structure that supports it. The goals are to signicantly improve our customer service and increase efciency
Basing ourselves on the foundations built during these recent years, and aware of the changes in the markets that support our operations, we must continue resolutely fullling our commitment to growth and international positioning. We must continue to carry out our strategy to expand and enhance our offering of products and solutions, strengthen our competitiveness, and maintain management focus. Looking to the immediate future, America and Europe are the main market objectives throughout our businesses, while Asia is our medium- to long-term goal. China is our primary industrial base in Asia, but we continue taking steps towards identifying opportunities to become established in countries that are key to our future, such as India. We begin 2011 with a new organization oriented by business, a new corporate structure that supports it, and a new management system based on the SAP tool, which has already been implemented in the Groups main businesses. Thus, we are looking to focus more on the businesses, signicantly improve our customer service, increase the efciency of our organization, and reduce costs. The good results obtained in recent years are due to the skill and ability of our professionals to dene and implement a strategy that is appropriate during times of economic hardship, as well as to everyones effort and dedication to a group project that extends beyond geographic borders or each of their businesses. We are a company with international presence, but our strength lies in our approachability and the close relationships we have with our customers, which is something our attitude and style must always reect.
Alexander Arteche
CEO of the ARTECHE Group
> Looking towards 2013, we developed a strategic plan that will guide us in the upcoming years. Aware that the business environment has changed, we continue with our commitment to a focus on growth and international positioning, as well as to the expansion and enhancement of our offering and the focus of our management. Thanks to the implementation of the New Management Model, we can continue improving our customer service, increasing efciency, and reducing costs. New steps towards identifying implementation opportunities in countries that are signicant to our future. The new technological plan and the Arteche Technology Center are tools that are essential for continued growth in relation to products and solutions and for taking advantage of the new opportunities in our industry.
A Solid Position
> ARTECHE has substantially increased and strengthened its presence in the electrical market in recent years. This position is the result of a combination of multiple factors, such as growing market penetration, both in traditional areas and through new developments; the incorporation of new companies with extensive experience in their geographic environments; the carrying out of new marketing proposals in solutions and equipment; nancial, technological and management independence which has been maintained throughout our history. Thanks to the new capabilities developed in recent years, we have been able to properly position ourselves in growth industries such as automation, quality of distribution and transport services, and turn- key solutions in the electrical sector. The Americas have become our primary market and we have obtained a leadership position in many of its countries. In 2010, we redesigned and launched our new protection, measurement, and control line, gathering all of the experience that ARTECHE has acquired in the over 30 years of operating this business. These activities, combined with regional expertise, make it possible for us to look forward to the opportunities that arise in the growth of renewable power generation and the development of the Smart Grid. It is time to build upon our ability to adjust to market conditions and our determination to maintain the close relationships that we have with our customers.
> Orders:
280.7 million
28% South America: 42% North America: 24% Asia/Pacic and Africa: 6%
Europe:
By market
Power Quality:
7%
300
280.7
232.9
2006
2007
2008
2009
2010
SUSTAINED GROWTH We have quadrupled our revenue in the last ten years. Of the last six years, 2010 has been the year with the greatest growth.
> People:
2,128
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Organization
Orientation by Business
> We closed 2010 with the denition of a new organization laid out within a corporate structure (Financial and Legal, Social and Corporate Reputation, and Business Development and Organization) aimed at strengthening the Groups cohesion and development, and with four primary Business Units: Instrument Transformers, Turn Key Systems, Smart Grid, and Power Quality.
Corporate Units
Financial and Legal > Lander Arteche Social and Corporate Reputation > Inazio Iribar Business Development and Organization > Santiago Rementeria
Business Units
Instrument Transformers > Roberto Ortiz de Zrate Turn Key Systems > Iaki Ruiz de Azua
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Organization
Arteche Nissin
We have adopted GIS technology through one of the world leaders in voltage transformers for gas-insulated switchgear substations
> In 2010, we entered into a partnership agreement with the Japanese company Nissin Electric for the incorporation of Arteche Nissin, a new industrial plant dedicated to the manufacture and marketing of voltage transformers for gas-insulated switchgear (GIS) substations.
EXCLUSIVE MANUFACTURER Arteche Nissin is the only manufacturer in Spain of voltage transformers for GIS substations, which places us in an outstanding position in this market which has signicant growth potential.
With this new project, which has been in operation since the beginning of 2010, we are expanding our offering to include GIS technology through one of the world leaders in this segment (with more than 20,000 gas-insulated transformers in operation all over the world) and entering into a market with high growth potential. Advanced GIS technology has important advantages due to its light and compact design and safety characteristics. It also provides highly-reliable insulation and requires simple maintenance.
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Organization
Eurogruas Arteche
A complement to our offering in wind farm installations in South America
> As part of our strategy to assist with the development of renewable power generation in the Americas and provide our customers with a complete solution, we have incorporated Eurogruas Arteche together with the company Eurogruas, each owning 50%. Through this company, we are entering into the business of assembling and starting-up wind turbines and maintaining wind farms. Wind Power Generation in Brazil is a growing business in an emerging market.. With this partnership, we supplement our offering in the building of wind farms. Companies such as Gestamp, Gesa, Multiner, Alstom, GE and Suzlon have already entrusted us with their wind power infrastructure projects.
WIND POWER GENERATION WITH THE COMPANY EUROGRUAS ARTECHE Just in Brazil, the company has been responsible for installing more than 400 wind turbines, with a total power generation of almost 700 MW.
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Organization
AS Qualitas
Power Quality in Chile
> The Power Quality Unit continues its international expansion. After the implementation in Mexico, the United States, and Brazil, we entered Chile through the formation of AS Qualitas in 2010. This was accomplished through an agreement with Schaffner, a Chilean company primarily involved in the manufacture of electrical substations and conductors. The new business will offer power quality solutions featuring ARTECHEs products and technology. This market offers great potential in the mining industry, given that it is in the worlds leading copper-producing country, and in the wind power sector, thanks to its effort to diversify its energy base. Due to the prole of its generation systems, very far from the consumption centers, the need for reactive energy compensation is very important.
IMPROVING THE POWER SUPPLY QUALITY Through this business ARTECHE aspires to become a world benchmark in solutions to improve the quality of the power supply, a leadership position which it already holds in Mexico.
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Organization
INNOVATIVE REINFORCEMENT In 2010, very important innovation projects have been planned for our future, such as the acquisition of new capabilities in optical measurement technology and the launch of our new solution lines for the future Smart Grid.
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Organization
Qgrid
Customized solutions for improving the power supply
> An agreement has been signed with Gamesa for the incorporation of Qgrid Technologies, which is dedicated to the design, development, industrialization, and marketing, at a global level, of power electronics for the quality of the power supply in power grids, aimed at integrating renewable energies into the grid and improving the power quality of large industrial consumers. We have started the activity with products from the portfolio of both companies, and are now undertaking our own manufacturing and the development of R&D&I capabilities.
IDEAL POSITION FOR FACING FUTURE CHALLENGES Thanks to our agility in decision-making, due to the full autonomy of our corporate model, and our rm commitment to growth, we are in an excellent position to face our industrys challenges.
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Corporate Responsibility
Commitment and Ethics
> At ARTECHE, we have made a commitment to contribute to the progress and well-being of the communities to which we belong and of the groups involved in the business, by means of honest behavior. We are aware of the responsibility involved in the carrying out of our activity and we assume it completely and fully. Our courses of action are based on our corporate values, which guide our activities within an ethical, social, and environmental framework. From this responsibility stems requirements that we adopt through our corporate management decisions, the organization of the corporation, behavior in the market, commercial decisions, etc. and which strengthen us as a socially-responsible company.
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Corporate Responsibility
A COMPLEX CUSTOMIZED SYSTEM The new implemented operating systems support the activity of more than 2,000 people all over the world.
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Innovation
Distinguishing mark
> Technological innovation, combined with quality, global production, and global commercialization, has been and continues to be one of ARTECHEs main areas of development. Because of the profound and incessant transformation of the market, we must stay constantly alert, developing new ways to continue being competitive. In 2010, around 4% of the total sales gure was dedicated to activities of applied research, technological and product development, as well as innovation. These tasks were aimed at developing or acquiring new technologies, improving design and production processes, and creating innovative, competitive, environmentally-advanced, and exible equipment. This innovative effort has signied a true transformation for ARTECHE in recent years and must continue being the key to future development.
2001 No. of production plants Traditional products New businesses Product families % of sales Traditional products New businesses 100% 32 5
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Innovation
Featured Projects
Monitoring of dynamic parameters in high-voltage power lines
> Real-time knowledge of the thermal conditions of high-voltage lines makes it possible for companies to optimize their power ow management. ARTECHE has developed the equipment and software necessary for this new application and provides complete solutions based on physical models that integrate the electrical information with meteorological data. In 2010, we incorporated new functionalities into the product, such as temperature and current measurement, GPRS communication, and online parameter setting. We also carry out pilot installations at electrical utilities in Europe as well as North and South America, making us one of the leading manufacturers in this new market niche. In addition, last year Endesa entrusted ARTECHE with the complete service of monitoring a set of lines belonging to its subsidiary, Chilectra.
IN SEARCH OF MORE EFFICIENT SOLUTIONS In 2010, we allocated more than 6.5 million euros to technical activities.
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Innovation
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PARTICIPATION IN LARGE PROJECTS ARTECHEs experience with large transmission lines is a key value with which to participate in future energy exchanges between countries and continents.
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smART RC establishes itself in America and begins its penetration into Europe
The design of the installation in Europe signies a radical revision of the solutions proposed up until now in the market
> The year 2010 marks the further establishment of ARTECHEs range of reclosers in the North and South American markets and begins its expansion into Europe with the installation of the rst smART RC recloser. Specically, ARTECHE has proposed a new solution to the company Central Elctrica de Pozo Lorente in Albacete (Spain) to update their installations, including the new smART RC recloser model. It is a minimally-invasive installation that makes it possible to provide remote control solutions in a local manner and signies a 70% cost reduction for this type of installation, in comparison with the solutions proposed to date in the market. Moreover, 2010 saw the rst sales of reclosers with our own protection in Brazil.
IMMERSED IN A TRANSFORMATION THAT WILL ENHANCE OUR COMPETITIVENESS In addition to our tradition as transformer and relay manufacturers of renowned quality (operating in over 150 countries), there is now a growing recognition in the market of ARTECHE as a supplier of new solutions.
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LEADERSHIP POSITION IN BRAZIL ARTECHE participates in 42 % of the wind power installed in Brazil, giving the Group a leadership position in wind farm installations.
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WE PROVIDE MORE SOLUTIONS A total of 40% of the revenue generated in 2010 was related to products and services incorporated in the last eight years.
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Social Commitment
Integrating people, creating a team
> People are one of ARTECHEs essential assets. We are committed to a company model that integrates people and fosters their personal and professional development, all in an environment of trust and participation.
> People:
2,128
Europe: 625 North America: 712 South America: 597 Asia-Pacic: 194
We continue growing
> A total of 114 professionals joined the ARTECHE team in 2010, 45 of whom have higher education degrees. We are a multicultural team committed to the Groups objectives and able to effectively respond to any challenge.
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Social Commitment
DEVELOPING TALENT We encourage the constant development of our professionals. Our commitment shows through the implementation and completion of actions aimed at creating valuable proposals for the employee.
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Social Commitment
OBJECTIVE: RISK CONTROL AND IMPROVEMENT OF HEALTH AND SAFETY The year 2010 saw the establishment of a project to obtain the OHSAS 18001:2007 certication at the plants in Spain and Argentina. Adding Mexico to the same system will be the next objective.
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Social Commitment
RURAL ELECTRIFICATION IN MEXICO ARTECHEs experience in carrying out a rural electrication process using auxiliary voltage transformer services in the town of Tubares in the state of Chiguagua (Mexico) was selected in 2010 as a success story to be presented at the World Energy Congress (WEC) and CIGR.
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