House of Aboitiz: Basques who helped build the Philippines

Posted at 03/21/2010 12:20 PM | Updated as of 03/22/2010 2:17 PM

CEBU, Philippines - Their unique language has long since withered and died across the Philippines, but the smarts of the Basque people who created chunks of the modern world live on in the house of Aboitiz.

Founded by an immigrant Basque rope fibre trader late in the 19th century in the waning years of Spanish colonial rule, Aboitiz and Co. today remains a major player in the economy of the Southeast Asian nation.

Run from the country's shipping capital of Cebu, it sells electricity to millions of Filipinos and ferries them across the vast archipelago, while offering banking, construction and a host of other services.

"Definitely for the central and southern Philippines, they are the face of the old rich," said Eileen Mangubat, publisher of leading local newspaper Cebu Daily News.

A century after the end of Spanish colonial rule, the story of the enduring Aboitiz empire offers a rich glimpse into the Philippines' economic heritage.

Many wealthy Filipinos of Spanish ancestry got their big start from huge land grants given as reward for services to the crown, later forming the ruling class when the Philippines gained independence after World War II.

However, the Aboitizes built their wealth through enterprise.

Hemp trader Paulino Aboitiz started the business in the late 19th century.

He had the same hunger for work and taste for risk-taking as the Basque farmer-sailors who crewed for colleague Andres de Urdaneta as he circled the world to set up Spain's first colonial government in the islands in 1565.

Paulino Aboitiz's descendants shepherded the company through two wars and, at one stretch during the 1920s, a close brush with bankruptcy.

The business evolved from one that focused on sugar and vegetable oil milling in the early part of the 20th century to one that is now extremely diverse.

One important move was investing heavily in the energy sector when the government started giving up its power monopoly a decade ago.

Today, the Aboitiz family stands alongside the Zobel de Ayalas, who run Ayala Corp., the country's biggest conglomerate, as clearly the two most prominent Filipino clans of Basque lineage in Philippine business.

The company has 31,000 staff and two previous former chief executives, Jon Ramon Aboitiz and Enrique Aboitiz, remain on Forbes magazine's list of the 40 richest Filipinos.

The Aboitiz business went public in 1994 with the listing of their holding firm Aboitiz Equity Ventures, which is now capitalised at 1.63 billion dollars.

In a rare one-one-one interview from the company's modest headquarters in an unfashionable district of Cebu, current chief executive Erramon Aboitiz said the company's success could be partly attributed to its Basque history.

"The Basques are very industrious and they are very hardworking," said US-educated Aboitiz, 52, a quiet, deliberately spoken man whose office walls are lined with prints of some of the earliest known maps of the world.

"In fact, if you even go to Spain... a lot of industries are actually in the Basque areas."

However Aboitiz, only the group's sixth chief executive, admitted he can no longer speak Basque.

"The people that spoke probably a little bit were the generation of my grandfather," he said.

And he emphasised the company's success was mostly due to the family's willingness to modernise and adapt.

"We do believe in traditions and looking at how things were done in the past, but we also think about how things should be in the future and don't fear making that change when we feel it's required," he said.

"Flexibility is probably one of the more important ingredients in business."

Ricardo Lacson, a senior Aboitiz executive, said his employers' success did not stem from their Basque heritage but rather their embrace of modern management methods, in which people are rewarded on merit.

"Just because you are an Aboitiz does not automatically mean you will get that privilege," said Lacson, a vice president for Visayan Electric Co., the country's largest power distributor outside Manila.

"They are very fair. They have this desire for new and better ways of doing things."

Nevertheless, Erramon Aboitiz said the company would remain firmly under family control.

"We are a family consortium of cousins," he said.

Aboitiz said he was part of the fourth generation of the Aboitiz family that was entrusted with honing the skills of those among the fifth, who were now rising through the ranks.

The challenge for a family-run business was staying cohesive so that it could move swiftly to take advantage of new opportunities, according to Aboitiz.

"It's very important that we all understand what we are trying to do and to stand by it. That's the understanding that we all have," he said.

And as the country suffers its worst power shortage in nearly 20 years, the Aboitiz group, with more than half of its turnover coming from the power sector, is among the best placed for the opportunities presented by the crisis.

"What we have today are businesses that we think are good businesses where we have a good market position. We think that they can be profitable in the long term," he said.