Aboitiz Family

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The Aboitizes is a prominent family in Cebu City that runs the family-owned Aboitiz Equity Ventures operating businesses on power, banking, food production, integrated transportation and logistics (air/land/sea), property development, construction, shipbuilding and leisure/resort all over the Philippines.

Contents

Beginnings

The family corporation traces its roots to a Spaniard mariner from Basque, Spain named Paulino Aboitiz. Soon after Paulino Aboitiz married Emilia Yrastoza y Torres, daughter of a Basque shipping merchant from Guipzcoa, Spain and a Spanish mestiza from Ormoc, Leyte, he traded in abaca fiber or hemp. Paulino Aboitiz also operated a general merchandise business with Angel Moraza, his brother-in-law and husband to his wife’s sister, Guadalupe Yrastoza, who was based in Baybay.

When the Spanish Government in Manila fell in 1900, Paulino Aboitiz moved his family, wife and his ten children, to Cebu. There, Paulino Aboitiz created a business partnership with Jose Muertegui, an Abaca dealer based in Palompon, and named their business Muertegui y Aboitiz. Their business thrived and soon after, they had the need to buy the ship, “Picket” in 1907 to transport their abaca products. Businesses combining shipping and abaca were common at that time.

Ramon, Paulino’s second son assumed his position at the firm at the age of 22 and the business prospered further. Together with his elder brother, Guillermo, Ramon established another merchandising business named G. y R. Aboitiz to cover areas unreached by Muertegui y Aboitiz. In 1916, the Aboitizes bought Muertegui’s share for PhP95,000 and the Muertegui y Aboitiz partnership ended.

In 1918, Ramon bought passenger ship “Tubig” from Smith, Bell and Co. The family then formed a new partnership called Viude e Hijos de P. Aboitiz that operated on passenger shipping. Ramon petitioned to the Commission on Public Utilities for their passenger ship to operate the route between the Cebu and Leyte ports of Baybay, Inopacan, Hilongos, Bato and Hindang.

In 1919, Ramon, his wife Dolores and son Eduardo left for Spain and sold his share to his brothers Guillermo and Vidal. He believed that he has left the business in good condition for his mother and siblings to live by.

On February 4, 1920, the Bureau of Commerce approved the corporation founded by Guillermo Aboitiz and a Portuguese businessman named Arnaldo F. Silva called Aboitiz y Compania Incorporada that capitalized at 1.25 million and PhP500,000 paid-up capital. Cousins Manuel Moraza and Joaquin Yrastoza bought 300 and 50 shares from the corporation, respectively, thereby joining the corporation while Paulino and Luis bought 100 shares each.

A few months after, the business was in peril. Ramon Aboitiz had to come back to the Philippines in September 1920 after his 14-month stay in Spain. He had found out that corporation owed PhP2 million to the bank and others. Ramon had an iron grip on the corporation’s reputation by refusing to declare bankruptcy. Instead, he had arranged an PhP800,000 loan from Philippine National Bank (PNB) manager Jose Martinez and borrowed money from businessmen, Gotiaco Hermanos and Joaquin Castro. He had also convinced Macleod and Smith Bell to advance funds to the company in exchange for a first choice of any abaca shipment. While having financial difficulties, Ramon nevertheless continued to venture into profit-making businesses by acquiring Cebu Ice and Cold Stores Corp. in 1926 offering services of cold storage, sold ice, fruits, meat and other refrigerated and frozen goods.

Ramon was able to pay off the loan 20 years later and their business caught up afterwards as demand for abaca hemp and copra grew. World War II

When the Japanese invaded Cebu on April 10, 1942, they did not falter in conducting their business. However, a huge blow struck them when the bombings hit their knitting factory in Manila, their power plants in Mindanao, a portion of their shipyard in Mactan Island, hardware store and ice plant in mainland Cebu.

Through diversifying their businesses, the family corporation survived the devastations brought by the war.

The Aboitizes’s knitting factory and liquor factory continued to bring in profit throughout the years. At the same time, Ramon and his brothers rebuilt their enterprises with what was left of their company assets.

Post World War II

With the onset of the American occupation in the Philippines, the US Navy sealed a contract with the Aboitizes through their company’s Cebu Shipyard and Engineering Works. It allowed the US Navy exclusive use of the shipyard for two years.

From this point, the family corporation is venturing into another shipping company, started manufacturing oxygen and started reviving their power plants in Cotabato, Mindanao named Cotabato Light and Power Co. and bought a franchise of Davao Light and Power Co.

After Ramon’s management of the corporation, Ramon’s son, Eduardo, took over before handing it to Ramon’s brother, Luis, and finally to, Eduardo’s son, Jon Ramon, who is currently the Chief Executive Officer and President of the Aboitiz & Co. 1990s

Under Jon Ramon’s leadership of the Aboitiz & Co., the company has went public in 1994 through Aboitiz Equity Ventures (AEV), a holding management company or business in power distribution, financial and insurance services, food and industrial production. AEV became the publicly listed holding and investment management company. The thrust of the company is to work towards its business development in banking and power.

The new management also understood the benefits of technology that it has partnered with Bayantrade, a procurement exchange company and is partnered with Ayala Corporation, Benpres Corporation, JG Summit, Philippine Long Distance Telephone Company and United Laboratories. Through this, Aboitiz Equity Ventures has used information technology to expand its business opportunities and increase productivity of its employees.

Aboitiz & Co. has expanded into industrial and commercial real estate development, banking, power distribution and generation, freight forwarding and food-related business.


Business & Family Values

A strong sense of business acumen lived through the legacy of the Aboitizes. Ramon Aboitiz’s refusal to declare bankruptcy of Aboitiz y Compania Incorporada in the 1920s proved that business astuteness and esteem could overcome such difficulties. He wrote to Silva, the Aboitiz y Compania Incorparada president and general manager at that time, "The biggest fortune that I have is my word and my reputation. Money can be lost and can be recovered, but once reputation is lost and one’s word is worthless, one is surely finished."

Taking calculated risks allowed the Aboitiz group to evolve into a conglomerate rather than to remain as a mere trading company was key through its survival through World War II and maintain its longevity up to the present. When Ramon Aboitiz acquired Cebu Ice & Cold Stores Corp., the company invested on buying new equipment. However, after upgrading the company’s equipment, electric refrigerators at that time are coming into fashion. A market study was inevitable and Ramon Aboitiz found out that only 20% of his clientele are able to afford the refrigerators so he pursued investing on Cebu Ice & Cold Stores Corp.

This attitude of taking calculated risks combined with a keen sense of timing is also an essential business practice among the Aboitizes. Through the years, the company was able to find opportunities in businesses and selling their goods at the right time. Ramon Aboitiz’s timing is near perfect that his particular businesses are acquired sell at their peak. He sold goods with potential and sold them successfully and however bleak the business economy is, his goods still sold and brought profit to the company.

At the advent of the new century and the pervasiveness of technology, Jon Ramon carries the same attitudes and leads Aboitiz Equity Ventures to invest on the internet and e-commerce. "Every company has to have an Internet strategy because future business is completely intertwined into the Internet and e-commerce," notes Jon Ramon.

Jon Ramon is aware that closeness within his Aboitiz family is not enough to succeed in business. "We realized early that it’s not an easy thing to stay together. We have to work at it," he explains. It was necessary for them to create a family council as a venue for regular meetings and discuss issues. Decisions emanating from their family council are decisions voted by the majority.

“After a decision is made, everybody abides by it”, he says. Even family members are not exempted from company rules. "Rules must be equally applied to all," he adds. At present, 17 family members are working within the company. “Many people think we’re all-family, but we’re only 17 working family members,” Jon Ramon says.

Aboitiz’s family business has been passed on for four generations and they have maintained a smooth transition from one generation to the next. Jon Ramon’s father, Eduardo, made a ruling that family members employed in the company who are over 60 years of age must step down from position but will still serve as elderly advisers to the younger generations.

Aboitiz family members do not become part of the Aboitiz & Co. merely because of genealogy. They have to prove their worth. Starting from childhood, the Aboitiz children should learn about the different aspects of their businesses. Taking school breaks as an avenue to work for the company and learn the Aboitiz way of doing business.

It is also important to the Aboitizes to maintain close ties with the Chinese community and Aboitiz scions studied Mandarin in Beijing and Taipei to ensure this relationship continues. Even Jon Ramon was branded “useless” by his grandfather for not being able to speak in Chinese.

References

Citation

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