C Si Ni Cr V Ti Ta Sc Li Sr Zr Fe Cu Zn Sn B Al Ce U Mn Mo Nb Sb

The market prospects have improved substantially over the past twelve
months. The division exited 2010 with an order backlog substantially
higher than at the end of 2009. The improved 2010 order backlog and
a positive book to bill ratio of 1.14x reinforce the positive developments
in the market. Demand is expected to grow moderately in 2011.
The Engineering Systems Division acquired an initial 30% stake in Dynatech Furnaces (Mumbai)
Private Ltd, a provider of heat treatment furnaces, in order to gain entry into the Indian market.
ESD will increase its ownership in Dynatech to 100% by 2015. The Dynatech investment, a key
part of the division’s long term strategy, will enable the Engineering Systems Division to serve
fast growing markets in India such as tool-steel, automotive, aerospace and nuclear industry. The
division will also utilize Dynatech’s cost competitive production resources to produce certain heat
treatment furnaces as well as provide local engineering and service support, which is a key factor
for the Indian market.
End Markets
ESD’s principle products and services include vacuum furnace systems and operating facilities
providing vacuum furnace services for the treatment of sophisticated industrial materials. The
unit designs, engineers and produces vacuum furnace systems for metallurgical applications including
melting high purity and sophisticated metals and alloys, heat treatment and high pressure
gas quenching, precisions casting, turbine blade coating and sintering applications. The majority
of products produced by these systems are the basis for critical components used in aerospace,
electronics, energy, specialty metal and chemical applications. We use management estimates
and consistent assumptions for the following remarks on segmental end markets.
The division achieved its best quarterly order intake in two years during the fourth quarter
2010. The division generated a 1.59x book to bill ratio and saw improved activity in all of its end
markets. As in 2009, Asia was the most important market with 45% of order intake. Order intake
in Asia was dominated by China, with a particular emphasis on vacuum furnaces used in the
solar, specialty steel and titanium industries. North America and Europe accounted for the balance
of the order intake with 27% and 28%, respectively. In the North American market, nuclear
systems and the Own & Operate facilities were the most significant contributors. Order intake in
Europe was dominated by the specialty steel, superalloys and aerospace industries.
Energy
Solar and Power Generation
ESD produces a variety of vacuum furnaces for specialty steels and super alloys widely used for
power generation. Sales of DSS furnaces accounted for 33% of revenue down from 54% in 2009.
Order intake for solar increased by 98% to $81.1 million in 2010. Demand for solar furnaces increased
by the end of the year, however, is still considered volatile since Chinese imitators have
begun to enter the market. In order to protect the market share, the division developed the next
generation of DSS furnace, the SCU600plus which has over 30% lower operating costs per ingot
produced. The SCU600plus is currently in final testing for commercialization roll out in 2011.
AMG acquired intellectual property and manufacturing assets related to Mono2 solar casting
technology from BP Solar International Inc. This proprietary technology is used to produce high
efficiency monocrystalline silicon ingots in standard SCU furnaces using a variety of feedstock,
including poly silicon and upgraded metallurgical silicon. This new process will offer a unique
28 Report of the Management Board | Engineering Systems Division