Success secrets of the century-old Aboitiz conglomerate

I don’t care how poor a man is; if he has family, he’s rich. —Dan Wilcox & Thad Mumford

An ounce of blood is worth more than a pound of friendship. —Spanish proverb

The only rock I know that stays steady, the only institution I know that works, is the family. —Lee Iacocca

How did the respected, multibillionaire Aboitiz clan of Cebu maintain harmonious family unity and business success across more than four generations, unlike many other top business families with fewer heirs but with so many bitter and ugly feuds?

The Aboitizes control over 50 progressive firms, including 18 electric power firms, Union Bank, the Cebu-based City Savings Bank, Philmico flour mill, Fil-Am Foods, 2GO, Aboitiz Transport, Cebu Industrial Park Developers, Inc., the construction firms of their high-end Amanpulo resort in north Palawan, which is a joint venture with the Sorianos, who used to control San Miguel Corp. 

At their last clan reunion in 2005, a total of 475 Aboitiz kin gathered to rekindle family ties, honor their enterprising Basque ancestors from northern Spain, and to celebrate their over-a-century of economic and civic contributions to Philippine development. The Aboitiz clan traditionally holds a big reunion every five years.

The Aboitizes are civic-spirited Filipino citizens, yet they also admirably cherish their unique Spanish culture, language and distinctive Basque heritage. Ernest Villareal, a former top Aboitiz executive, told this writer that the clan members also have certain Chinese-style Confucian values like keeping a low-key profile, thriftiness and discipline, and some Cebuano businessmen used to refer to the clan as “Amoy-tiz” (the old British-style name of Xiamen City, Fujian province in south China, used to be Amoy).

Northern Spain and southern France are the origins of the Basque minority of Europe. The founders of the eminent Jesuit order, St. Ignatius de Loyola, S.J. and St. Francis Xavier, S.J., were Basques. Miguel Lopez de Legazpi, the founder of Manila now buried behind the chapel of San Agustin Church in Intramuros, was a Basque conquistador. The Zobel-Ayala clan patriarch Antonio de Ayala was also Basque.

It’s remarkable how such a large clan has flourished without losing clan unity, their traditional values, ancestral culture and vigorous entrepreneurial drive. How have they done it?

At a recent dinner with various clan leaders like Aboitiz Group CEO Jon Ramon Aboitiz, Erramon “Monchu” Aboitiz, Antonio Moraza, Sabin Aboitiz, Xavier “Txabi” Aboitiz, Luis Miguel Aboitiz, Stephen G. Paradies, and Tristan Aboitiz, this writer inquired about their conglomerate’s plans and also explored some of their business secrets. 

Jon Aboitiz said the group is bullish about the future of the Philippine economy, and that they will reinvest more in their core businesses like power, food, real estate, banking, shipping, transport and logistics. Asked about their Union Bank’s possible plans to buy other banks, he smiled and said, “There are no definite plans, but we are always on the lookout for any opportunities. We believe the Philippine economy has so much more growth potential, there are so many opportunities here, we should all continue to invest.”

Monchu Aboitiz, CEO of the Philippines’ No. 2 biggest electric power distributor and generator Aboitiz Power Corp., denies any plans by the clan to purchase or take over the Lopez-controlled No. 1 power firm Meralco. He said they prefer to bid for and purchase the other state-owned power plants to be privatized by the National Power Corp. He said, “Government should sell all the power plants of the NPC. There are still power plants under state control with over 5,000 megawatt capacity.”

Monchu added that from now up to the year 2011, the Aboitiz Group is planning to invest US$500 million in equity alone in power projects worth $1.5 billion to support what they foresee as robust, continuous Philippine economic growth. His advice to entrepreneurs and professionals in these times of USA/Japan economic slowdowns is for “all of us to work harder and to keep faith in the Philippine economy.”

Of the estimated 475 clan members, Aboitiz Equity Ventures senior vice president Xavier “Txabi” Aboitiz said there are only 16 relatives working for the group. The Aboitiz Group of over 50 companies — four of which are publicly listed firms — has 20,000 employees and about 500 officers and managers. The youngest scion is fifth-generation, Boston University-educated Tristan Aboitiz, son of Roberto “Bobby” Aboitiz. Another young executive of the fifth generation is William Paradies, whose paternal grandmother is an Aboitiz.

What are some of the rules that family members should follow when working for the group?

• The principle of meritocracy applies to all family members or professionals, regardless of who the person is or his parentage.

• All family members who want to work for the group must apply.

• Relatives applying must be qualified and have competitive credentials vis-à-vis the professional managers.

• Relatives should have good academic preparation and are first encouraged to work at least two years for other companies outside the group.

• Normally, the clan wants family members to start in operating positions first within the group before promoting them to any managerial positions, so they will know what’s happening with the rank and file, and with the diverse operations. They never start relatives at the top positions.

• Relatives who work with the group are not allowed to have any sidelines or other business interests, but must focus on their duties.

• All relatives who work for the group must retire at age 60, with the goal of encouraging more younger kin to rise and take over important duties or responsibilities.

• The fairness principle must be upheld within the clan.

• Regular meetings, open communications and transparency are promoted within leaders of the clan. It is important to have constant communications.

• Never take any family or clan member for granted.

• Do not forget the moral and cultural values of the clan forebears.

• Clan members are close-knit, often doing things together, traveling on overseas vacations with cousins or sleeping over at each other’s homes, even as kids. Many third-degree Aboitiz cousins consider fellow cousins brothers and sisters, building relationships based on mutual trust and respect.

• The collective family elects the leader of the business conglomerate until he retires at age 60 and another leader is chosen. 

• The whole Aboitiz clan believes in continuously adapting to innovation and new ideas, because a leader said, “If you don’t adapt, one day you might become extinct.”

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