IN THE world’s most dynamic region, family companies occupy the commanding heights of capitalism.
Ayala Corp. is one of the longest-running family businesses in the Philippines. For almost two centuries of its existence, it has become an icon in the business sector, as it continually adhered to its core principles and ideals for seven generations. The corporation started in 1834 and was founded by Domingo Roxas and Antonio de Ayala. It has been in existence for the past 181 years.
The family started out in agriculture then diversified into everything, from construction, to water to telecoms. Since then, the family has been moving towards a clear vision and adhered to an “enduring set of values”.
Currently, the organization is led by two brothers from its 6th generation–Jaime Augusto and Fernando. The siblings run the holding company that sets the strategy. Three children from the 7th to 8th generation are working their way up the corporate hierarchy.
Family businesses must have a shared vision to grow
Jaime Augusto has a glowing vision of the company as the driver of his country’s modernization. The company has always taken a leading role in this, from building infrastructure to supporting corporate philanthropy. But, in recent years, it has increasingly focused on the mass market in an effort at “nation-building.”
Sharing about how the family has maintained business leadership for generations, Fernando said that he takes a “professional, independent, and disciplined” approach to running its businesses. He explains that the Ayala family has remained united, and ensured orderly leadership succession through the years.
The success of the Ayala family is evident in the corporation’s diversified portfolio and increasing profits. They have professionalized and focused the company in recent years. The six main businesses, namely water concession, property, telecoms, electronics, call centers, banking and recently, infrastructure and energy, have been listed on the stock exchange and put in the hands of professional CEOs, but the family remains at the heart of the firm.
How does the Ayala Group view expansion?
Jaime once said, “We’ve always believed in the possibility of mergers and acquisitions as a way of expanding.”
That explains why the conglomerate has achieved partnerships with business leaders locally and internationally. As it is but natural for the Ayala Corp. to seize opportunities as they come, the time is right as the ASEAN Economic Integration looms. Jaime adds, “There’s a positive process that’s taking place. The momentum of lifting all the standards in the region to a new level is good for all of us. We’re all growing as countries, and the region has increased its trade among our countries. It’s an exciting time for all of us.”
He further adds, “Very entrenched domestic industries that have lived in a fairly protective environment will have a tough time, anyone who has not had the kind of pressures to bring down cost, to be more efficient, to take productivity up, to look for talent that is imaginative, find solutions. Anyone in industries that have been very closed will have a tough time adjusting.”
Ayala extends its reach to the huge ASEAN market
Among the 10 member nations of the ASEAN, Ayala has built a significant presence in Vietnam, joint venturing with the local utilities company, SAWACO (Saigon Water Company). I used to regularly visit their five-man operations in Ho Chi Minh City in a small decrepit building, and every year I was witness to positive changes in their operations.
Their expansion in Vietnam can be attributed to their huge success in 1997 when Ayala won the concession agreement from a Philippine government utility company and formed Manila Water. Today it offers reliable water supply to more than eight million customers. That success paved the way for their confidence in expanding their presence overseas.
Ayala/Manila Water’s start up years started with lending their expertise in a Word Bank-funded consulting engagement with SAWACO. Today the five–man team of water engineers has become a full-blown joint venture agreement focused on water concession. They are currently aggressively pursuing water expansion projects in Indonesia and have quietly extended their reached to ASEAN’s last frontier, Myanmar.