Empire built to last


By Tina Arceo-Dumlao
Inquirer
Last updated 06:46am (Mla time) 01/21/2007


THE Aboitiz Group traces its beginnings to a fateful journey made over 100 years ago by a son of humble shepherds.

That journey took Paulino Aboitiz from Vizcaya in the Basque region of northern Spain to Leyte in Eastern Visayas, where he planted the seeds of what would become one of the country’s biggest conglomerates with interests in power, banking, shipping, food, construction and real estate.

The reins of the group that Aboitiz founded are now in the hands of the fourth generation and they, like their fathers before them, never forgot the family’s humble beginnings, and this has allowed them to fix their gaze firmly on a brighter future for the group.

Aboitiz group CEO Jon Ramon Aboitiz tells the Inquirer in an interview at the company’s Makati headquarters that unlike other family-run corporations, the Aboitiz group is not in the hands of siblings, but cousins.

This may pose a bigger challenge for other families to keep the family business intact, but not so for the Aboitizes who constantly work on keeping the family and the various businesses together.

“The closeness has always been emphasized by different generations and the values have filtered down,” Aboitiz says.

“There is a high level of trust and fairness in everything that we have ever done.”


Challenges

That trust kept the family together when they met their first challenge right after World War I when the group almost went bankrupt because it took a big position in hemp.

When that did not pan out, the group was saddled with a huge debt and inventory of expensive hemp.

Through restructuring and the grim determination to rise, the Aboitizes survived the test that brought other firms to their knees and eventually to just a footnote in Philippine economic history.

Aboitiz says the group also survived because it was quick to take advantage of opportunities in the horizon, which is a trait of any successful entrepreneur.

“We patterned ourselves after Chinese entrepreneurs and grew from there,” Aboitiz says. “We have always been entrepreneurs to a large extent and went in and out of so many businesses.”

“Our measure of success is to have made more right calls than wrong ones, and over 100 years, we have certainly had our share of failures,” he says.

The group had more hits than misses, such that it grew in stature, reach and influence, not only in its bailiwick in the Visayas and Mindanao, but in Luzon as well.

But Aboitiz’s father, Eduardo, the second president of Aboitiz and Co., knew that the group would not be able to move further ahead on its own power alone.


Professional managers

Eduardo, thus, brought in professional managers into the group as early as the 1960s.

He was of the belief that the right person for the job may not always come from within the family.

That period saw Aboitiz and Co. evolve from a purely family-run firm into a corporation with a corporate staff and a group of professional managers with presence in vital industries.

That high level of professionalism within the group has been fostered through the next generations such that of the some 20,000 employees under the wings of the group, only 15 are members of the family.

The latest addition is Tristan Aboitiz, who will be the first from the family’s 5th generation to join the company.

They did not get the job because they had the right last name, rather they had the right qualifications and they go through the tests just like any other employee.

“No company of our size can survive without professionals,” Aboitiz stresses.

To attract the best of them, the family must be professional, too.

“We have rules in the family. And one is that the family members know that they have no right to a job. There are no heirs apparent here,” Aboitiz says.

For those who do want to work in the group, Aboitiz says most usually work outside the company for about two years to prove themselves in their fields and to get a feel of the workplace before joining the company.


Diversification

That experience has gone a long way in keeping the group brimming with new ideas and enthusiasm to take that next major step.

The 1990s saw the group become a major power in the business sector, but the group now in the hands of the present generation saw that the group’s future lay not in having fingers in many pies, but in concentrating resources and expertise in businesses where it has a comparative advantage.

Thus, the Aboitiz group bowed out of cement, aquaculture and sugar because it could not compete in these industries.

What was left was a considerable business in transportation (Superferry), power distribution (Davao Light and Power Co., Cotabato Light and Power Co., Visayas Electric Co.), power generation (Luzon Hydro, Hedcor), shipbuilding (FBMA and Tsuneishi Heavy Industries Inc.), food (Pilmico Foods), real estate (Aboitiz Land Co.), banking (Union Bank of the Philippines and City Savings Bank), delivery and supply chain management (2GO).

“We had to choose, and we chose those businesses where we can stay focused and remain competitive,” Aboitiz says.

The era of the big, widely diversified conglomerates has ended, and given way to conglomerates with a narrower, but sharper, focus.

Aboitiz says that through the years, the spirit of entrepreneurship, of taking calculated risks, has never left the company.

But this has been tempered by taking a conservative, prudent approach to doing business.

This helped cushion the group from the worst of the effects of the debilitating Asian currency crisis that hit the country and the business sector in 1998.

The peso fell in value against the US dollar and interest rates went up.

This posed a double whammy on companies with a huge debt exposure, especially those with debts denominated in foreign currencies.

“We were lucky because we have always been conservative,” Aboitiz says.

Aboitiz says it was also fortunate that the group’s operations are concentrated in the Visayas and Mindanao, thus, out of the radar screens of most intrigues.

“From my perspective, living outside Metro Manila kept us closer together,” he says. “We have a stronger bond and have a more simple life.”

This has also kept the group closer to the communities that they serve, not only with superior products and services but also with projects designed to improve their lives.


Philanthropy

It was Aboitiz’s grandfather, Ramon, who started the group’s philanthropic journey.

His son, Eduardo, took the philanthropic efforts to the next level by putting up the Ramon Aboitiz Foundation Inc.

RAFI today has a full-time staff that draws up long-term social development projects to help the communities in the Visayas and Mindanao.

Eduardo was also one of the top businessmen that founded the Philippine Business for Social Progress in 1970, because he shared in the belief that there should be an organized way of doing social projects, since the individual companies lacked the expertise to do it on their own at that time.

RAFI and the corporate arm, Aboitiz Group Foundation Inc., have several ongoing projects in education, health, culture and enterprise development that are going a long way in rescuing many from the grip of poverty.

The Aboitiz group, for instance, is involved in addressing water sustainability in Metro Cebu and environmental protection through Ecosystem Project Cebu, an integrated community-based program focused on environmental conservation.

The Aboitiz group also remains a partner of PBSP and is represented on the PBSP board of trustees and in the Visayas operations of the biggest corporate-led nongovernment organization in the country.

It is projects and partnerships like these that make going into business more worthwhile for the Aboitiz group.

“We have always believed that making money is important, but that profits should be shared with the community,” he says.

Aboitiz is confident that with these examples, the fifth generation of Aboitizes would continue to live up to the values and beliefs handed down from the time of the founder, Paulino, and they will continue to love each other and their country and take pride in what the group has accomplished.

“Like every other generation, we are building blocks. We try to add value and make the company better than before,” he says. “Hopefully, the next generation will improve on what we have done.”



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