A business legend

Eugenio Lopez, Sr., whose birth centenary is being celebrated this year by the group of companies he founded, is remembered as a pioneering entrepreneur and business leader. His crowning achievement was the acquisition in 1962 and subsequent masterful operation of Manila Electric Co., the country’s largest power utility.

Buying Meralco from General Public Utilities (GPU) was the biggest financial undertaking of its time and was fraught with risk. The Laurel-Langley Agreement extended the right of Americans to participate in Philippine business on par with Filipinos until 1974. In anticipation of this deadline, major American firms in the Philippines such as Meralco’s parent firm, GPU, were looking to sell.

GPU chief executive officer Albert Tegen had already talked to Herbert Allen of Benguet Mining and Joseph McMicking of Ayala Corp. but nothing came of these discussions. Tegen then approached Filipinos, including J. Antonio Araneta, Alfonso Zobel, Miguel Ortigas, Washington Sycip and Ramon del Rosario, Sr. but none of them followed through.

In his book on the Lopez family entitled "Phoenix", Raul Rodrigo related the many things Lopez had to consider for the venture.

First of all, the Lopez family had been in sugar for a hundred years. Power was an entirely new field. Lopez knew Meralco would require such enormous amounts of capital, managerial talent and personal focus that the Lopez family might have to get out of sugar to concentrate on power.

Second, like many of his ancestors, Lopez had learned that it was much safer to fund expansion from internal sources. The alternative – becoming heavily indebted to banks – was anathema to him. He didn’t like having a big debt hanging over his head because it might mean someone or some group dictating how he would move. But the size of Meralco required long-term financing, which meant accepting a sizable debt for around 10 years.

Third, Meralco was a public utility, which meant he would have to dilute his control over the power firm even as he bought it. This went against his practice of keeping a firm hand on his businesses. Early on, Lopez knew he had to establish a public corporation with broad ownership to buy Meralco because of the politically sensitive nature of the business and because foreign banks would want to ensure that the utility was transparently and properly run.

Audacity

Buying Meralco meant Lopez had to let go of a number of his prudent business practices that had been proven over time.

In pursuing the Meralco purchase, Lopez proved he was "guided by the past, but not imprisoned by it," said Rodrigo.

The daring acquisition demonstrated not only Lopez’s audacity but also his belief that Filipinos could manage businesses as well, if not even better, than Americans.

During the years 1962-1972, he proved this. Without tapping government financing or guarantees, Meralco increased its power generating capacity by a factor of five, adding 1.1 million kilowatts by 1972 and, in the process, becoming virtually independent of the National Power Corp.

It became the first Filipino company to issue bonds on Wall Street. It also offered the cheapest power rates in Asia, outstripping even Japan. At the same time, Lopez created a new corporate culture among Meralco’s employees, teaching them to put paramount importance on service and integrity. He became legendary for his care and concern for his employees, to the extent of building a company hospital and recreation center for them and their families.

Lopez was well-respected and hobnobbed with national and international business and political leaders. He had a strong work ethics and guided his people toward excellence. In 1972, his alma mater, Harvard University, acknowledged his stellar career and his philantrophy by giving him its "Distinguished Service Award". Doing the country proud, Lopez showed his stakeholders in every endeavor that the Filipino manager was among the very best in the world.