At an annual shareholders’ meeting of Aboitiz Equity Ventures in Makati, I asked a friend to introduce me to the company chair, Jon Ramon Melendez Aboitiz.
I wanted a sit-down interview with him for a book project on family conglomerates in the Philippines. He was top of my must-interview list for the portion on the family elite with a nationwide scale and reach who did not originate from imperial Manila.
Jon Ramon beamed with his signature radiant, warm smile and extended his arm for a quick handshake as we were introduced. He somehow remembered stories and analysis I’ve written and was interviewed about regarding one of their former businesses, shipping.
Shipping was one of the legacy businesses of the Aboitiz family, originally from Basque in Spain, aside from commodity trading and power distribution. The family used to operate a shipping business under the Aboitiz Group, which evolved into WG&A, and later into a more holistic logistics firm Aboitiz Transport. It operated under the popular “Superferry” brand plying different routes to bring passengers and goods across the archipelago, and later the 2Go brand for door-to-door service. (WG&A was later sold to a management team backed by Kuwaiti and then Chinese funders. Emerging tycoon from Davao, Dennis Uy, launched a hostile take over in 2016.)
“What do you want to know?” Jon Ramon asked, bringing me to my spiel on why I wanted to interview him. He has always been evasive of journalists when he was still the CEO of Aboitiz Equity Ventures. AEV is the publicly listed holding firm that houses the power, food, property, infrastructure, cement, banking, and other businesses. If there are public events, like a press conference or the annual stockholders meeting in the Makati financial district, he’d always excuse himself right after. He had a flight back to Cebu to catch.
I replied that I want to understand the business and the family from his point of view and how the group has become what it is now. We exchanged business cards, and not long after, we were sitting in his office at the Bonifacio Global City.
His office is cozy. Simple, actually, by Manila elite standards, but different from the company’s modest headquarters in an unfashionable district of Cebu.
Forbes estimated his and brother Mikel’s networth at US$265 million as of September 2018. In a country of over 100 million, the brothers ranked 33rd richest. His cousins Enrique and Erramon were included separately in the years before. He had our interview scheduled during his once-a-week Manila visit. Unlike the rest of the family executives who have made the complete transition from Cebu to Manila where the seat of power is, Jon Ramon preferred to still be based in Cebu. “I’m a Cebuano and I’m proud of that,” he declared.
Cebu grew into a shipping hub in the Philippines when local and international firms took advantage of the active trading before and after World War 1 and 2. Jon Ramon has been compiling old photos of the ships for a book project that would complement “Aboitiz: The Family and Firm in the Philippines,” which I read to prepare for our interview. He stood from his seat to search at the far end of his office for photos of the ships they acquired after World War 2. When he found some of them, he splashed them across the table as he spewed out jargons: ‘gross register tons,’ ‘deadweight tonnage,’ monohull fastcrafts, ‘domestic containerisation.’
The man knows his ship because his grandfather, Ramon Aboitiz, and father Eduardo indoctrinated him into it, he claimed. When he and his cousins were still kids in the 1950’s and 1960’s, the elderly ones would require them to tag along during weekends or summer breaks to places where the family had business ventures. That meant traveling on their cargo ships to reach Jolo, Cotabato, and Davao. The family bought into power distribution or ice manufacturing operations in these Mindanao areas at the time when they were still considered the wild, wild south.
Being on the ship for days also meant strategizing how best to avoid other items traveling with them, especially the occasional pigs loaded in front on deck. He chuckled at the memory of how they would have to make sure they are not in the way so the smell of the meat would not hit them.
Traveling as a kid and spending time on a ship was “fun,” he muttered. He knew the fastest or safest shipping routes because he has plied them several times. It “depends on the part of the Philippines you’re in,” he stated when I pushed for more anecdotes of his island-hopping days.
He took out a map. To help me visualize what parts of the country he was referring to, he traced the routes with his finger: Iloilo, Zamboanga, Basilan, Jolo, Davao is one. Another is Cebu, Cagayan de Oro, Iligan, Pagadian. Closer to the Pacific side meant docking in Palompon and eventually ending up in Surigao. He sounded like a walking geography expert.
The island travels gradually became work even before he turned 20. After finishing high school in Cebu and Iloilo, his grandfather had him sent to the UK, a country where Don Ramon was also sent to learn English since Spanish was losing luster in the world stage at the turn of the 19th century. Jon Ramon spent a year taking crammer courses in the house of a Cambridge professional to prepare him and other tutored kids to take O and A levels to enter the university. His father, however, later said he should attend Santa Clara University in California because that’s where he and the others in his generation went to after World War 2.
Then it was 1970. He finished at the top 10% of his management class at Santa Clara and went home ready to join the family business. The first question his grandfather asked was, “Can you speak Chinese?” Majority of the traders or clients are Chinese entrepreneurs. He replied no.
“You don’t know anything then. I have to spend time teaching you what to do in business,” Don Ramon insisted, as Jon Ramon recalled. He wasn’t paid for the first four months.
His first job was to inspect the toilets since his grandfather wanted to make sure they were clean. It made sense. A ship with dirty toilets is not good customer service. It’s this experience that would mark his visits to any ship. “I would start from the engine room. Then I would go up, and the first place I would go to was the toilets.” He grinned at the memory.
If scrubbing toilets was Jon Ramon’s version of “starting from the bottom,” other Aboitiz family members who later joined the business also have their own tales, ranging from floor scrubbing to cargo loading to being a lineman. That, and being trained to handle different aspects of various businesses, have become a trademark of the clan. New family members who want to join the ranks don’t have it easy.
Jon Ramon, who was among the oldest in the 4th generation of the Aboitizes who migrated to the Philippines, trained for about 6 years. He worked in different business units: accounting, credit and collections, finance, operations, etcetera.
In 1976, his uncle, who was the president, was retiring. The family turned to Jon Ramon to take on the top post. He was hesitant. He was only 27. He suggested taking on the second-in-command role, but this was shut down. He was told that if he was going to run the business, he needs to be the president. He called it his “baptism of fire.” He didn’t take a vacation for 5 years and worked 7 days a week.
The shipping business grew as Cebu’s furniture business also flourished. Soon there were more goods to be shipped out of Cebu, and more raw materials to bring in. New technology became available to have more efficient operations and to take advantage of economies of scale. Aboitiz Group bought bigger ships or entered into a joint venture with foreign lines. They expanded into door-to-door service.
It was a tough business, he said, growling at the thought. The industry is full of players “who will promise you not to cut you, then they turn around and cut you right after.” Competition was always intense. It required massive capital, and “you have to be there, watching it all the time.”
He let out a big sigh, dropped his shoulders, slowly tilted his head. They had long wanted to get out of the shipping business, he disclosed. It was taking so much executive time. “You need your top executives focusing on businesses that are doing well and have a future, and not in businesses that are not doing well and have no future.”
In 1991, Jon Ramon stepped up to be the president and CEO of Aboitiz & Company, the privately held family holding firm that consolidated many small but budding businesses relatives engaged in over the years. They later organized Aboitiz Equity Ventures or AEV, with Jon Ramon as the CEO and his younger brother Roberto Eduardo (Bobby) as chair. When they listed AEV in the Philippine stock exchange in 1994, it was not only an avenue to raise funds, but it also became the turning point in instilling more discipline into the business. Before the 1997 Asian Financial crisis hit, a strategy to rationalize all the business the family members were into was finalized. All the others were sold to pay down debt and to focus on those that “have a future.”
It took a few more years for the shipping business to be finally sold. By then the rise of the budget airlines as inter-island travel alternative, and the constant threat of volatile oil prices that brought costs skyrocketing firmed up their resolve to sell.
Was the whole process of selling a legacy business in any way or at any time emotional? He looked at me with piercing eyes, as if about to say something really serious. He took a deep breath. “One of the first things my grandfather imparted was: ‘Never fall in love with your business.’ And it’s very very true. You never fall in love with your business. If it’s time to sell the business, then you sell it. But you cannot sell it if you love it. It’s not your wife.”
I was struck by how matter-of-factly he said those words. He went on for a couple more minutes to explain the decision, and why it was such a relief to let go of the shipping business. I extensively reported on this transition about a decade ago, but it was at that moment, in front of the man with expressive eyes and white beard, that I fully understood why. “If it’s the right time to sell, for the right reason, for the right price, then sell it. Move on,” he said convincingly.
It was around the time when the group pivoted toward what Jon Ramon described to stockholders in 2014 as a “once in a lifetime opportunity.” Since the mid-2000s, the group has been “winning strategic assets in the privatization of National Power Corporation assets.” No other business group in the country has won in as many bids for state-owned power generation plants as the Aboitiz group.
In 2009, Jon Ramon bowed out of Aboitiz Equity Ventures as president and CEO to pass on the baton to his cousin, Erramon. He then took on the AEV chairmanship, a role that his brother Bobby left to focus on Ramon Aboitiz Foundation Inc (RAFI), the foundation of their branch of the family. When Bobby died in 2017, Jon Ramon took over the reins of RAFI.
Erramon wrote in a public statement that, “after 49 years of being a strong pillar” for the family and for the business, Jon Ramon passed away on November 30, 2018.
Jon Ramon, the proud Cebuano, left behind a diversified conglomerate well positioned to make a significant mark in the country’s economic future. AEV is a P307 billion-worth giant (as of November 29, 2018) with expanding interests in power (Aboitiz Power), banking (UnionBank), food (Pilmico), infrastructure, and land (Aboitiz Land). It has been recognized as one of the best-managed companies in Asia. RAFI and the corporate foundations are also among the most generous philanthropists in the country.
Prior to his passing, the family has set up a constitution, a family council, and have rules of engagement on who can join the business. They have been following a succession plan that involved screening and getting into the fold other members from different branches of the clan, including those from the 5th generation. Erramon is set to retire as CEO of AEV in 2019.
Whoever will take the helm must make sure the toilet is clean.
- Goodbye shipping: Aboitiz focuses on power
- Passenger shipping industry drowns while budget airlines fly high
- Aboitizes almost bade shipping business goodbye
- Timeline: How the sale of Aboitiz’s transport business went kaput
*2017 photos at the Bonifacio Global City office of Jon Ramon Aboitiz were snapped by Sofia Tomacruz