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Close Up A Closer Look At The Ayala Corporation, Philippines' Oldest Conglomerate

A Closer Look At The Ayala Corporation, Philippines' Oldest Conglomerate

A Closer Look At The Ayala Corporation, Philippines' Oldest Conglomerate
Joseph McMicking with Alfonso Zobel and Enrique Zobel
By Charo Logarta
April 04, 2014
It is a name synonymous with visionary leadership, exemplary management and innovative business practices — the very same values Ayala Corporation was founded on 180 years ago

This feature story was originally titled as The Power & The Glory, and was published in the April 2014 issue of Tatler Philippines. It was published online on the same month and was recently updated on March 23, 2020.

There is perhaps no better witness to the ups and downs of the country’s history than Ayala Corporation. Founded in 1834 when Spain opened Philippine ports to international free trade, it traces its roots to Casa Roxas, a company with interests in farming, manufacturing, mining and trading. Its pioneers were all visionaries with keen business acumen, foresight, and the courage to make decisions that seemed illogical then but have been proven brilliant today.

Today, Ayala is synonymous with social responsibility and sustainability, balancing business growth with caring for people and the planet. The oldest conglomerate in the Philippines has maintained a fresh, young perspective on the country’s future with its diverse interests—from traditional cash cows like real estate, property development, retail, water infrastructure and financial services; to the evolving telecommunications, electronics, and business process outsourcing industries; to sunrise ventures in renewable energy, information technology, and information management. But as Ayala continues to explore growth opportunities, it has maintained a keen sense of corporate citizenship and nationalism, well-aware that business is a critical partner in economic development.

SEE ALSO: Ayala Prepares 2.4 Billion Pesos To Support Its Partners & Employees Amidst COVID-19 Crisis

Antonio de Ayala (1805-76)
Antonio de Ayala (1805-76)

The founders of Casa Roxas, Domingo Roxas and the young Basque Antonio de Ayala, practiced what the world’s best business schools spend years teaching their students to this day: diversify company assets and turn each into a centre of profitability by creating more value for products. Roxas’ children—Jose Bonifacio, Mariano, and Margarita, who later married Antonio de Ayala—ran separate, but linked business interests, honing their business instincts through the years.

The Roxas siblings also realised that, in addition to nurturing a thriving business, maintaining an active social engagement was essential to networking and building lasting partnerships. Mariano was heavily involved in the arts, having helped establish the Academia de Dibujo y Pintura de Manila—which counted Juan Luna and Simon Flores among its students. Margarita headed an organisation that aided the poor and the sick and spent her free time visiting slum areas. She also donated a three-and-a-half hectare property to the Sisters of Charity, which was later converted into the Colegio de la Inmaculada Concepcion de la Concordia, known today as La Concordia College.

Domingo Roxas (1782-1843)
Domingo Roxas (1782-1843)
Ayala y Cia building on Echague St, Manila, 1927
Ayala y Cia building on Echague St, Manila, 1927

Among the Roxas siblings, it was Jose Bonifacio who possessed a strong intuition. In 1851 he purchased a rolling tract of land in San Pedro de Makati for just a little over 52,000 Philippine pesos. At the time, the land was considered a waste of money as it was too far from Manila to be considered prime property. This virtual marshland later became Hacienda de Makati and decades later, the country’s premier business and financial district.

The family’s third generation—sisters Carmen and Trinidad, and their respective husbands, Pedro Pablo Roxas and Jacobo Zobel Zangroniz—saw Casa Ayala evolve to Ayala y Compañia. By this time, the family’s business interests included El Banco Español-Filipino de Isabela Segunda, the first private commercial bank in Southeast Asia and precursor of the Bank of the Philippine Islands. Inspired by the public transportation system in Europe in the 1870s, Jacobo introduced the tranvia, the first streetcar system in Manila.

The Philippine Revolution and American colonisation led Ayala y Compañia into transition. The tranvia was sold to an American company that was later called the Manila Electric Railway and Light Company; the distillery which made the country’s first commercially-produced gin, Ginebra San Miguel, sold to businessman Carlos Palanca; Enrique Zobel de Ayala, son of Jacobo and Trinidad, became managing partner of Ayala y Cia in 1901. Under his leadership, Ayala y Cia ventured into the insurance business, establishing Insular Life Assurance Company in 1910.

Ayala y Cia building on Echague St, Manila, 1927
Ayala y Cia building on Echague St, Manila, 1927
Casa Roxas, 1834
Casa Roxas, 1834
Margarita Roxas de Ayala (1815-1869)
Margarita Roxas de Ayala (1815-1869)

By the 1900s Ayala y Cia had amassed a great fortune and a wide array of businesses and assets. In 1914 the family’s assets were apportioned, with the children of Enrique Zobel and Consuelo Roxas de Ayala getting Hacienda de Makati. But the Great Depression in the United States took its toll on the Philippine economy. Enrique and Joseph McMicking, the first general manager of Insular Life, shepherded the survival of the Ayala businesses through the crisis, eventually charting a new path for the company.

In 1929 Enrique’s children—Jacobo, Alfonso and Mercedes—took a giant leap of faith and developed Hacienda Makati. McMicking, who married Mercedes, master planned the Makati property, successfully transforming the marshland into a well-planned and organised city. Even after World War II, the company saw the destruction in Manila as an opportunity to rebuild and expand. Out of the rubble came the demand for new residences—and Hacienda Makati, developed under McMicking’s Ayala Master Plan, was just the place to move to.

Forbes Park, Makati, 1949
Forbes Park, Makati, 1949
Aerial view of Makati City, photographed in the 1970s
Aerial view of Makati City, photographed in the 1970s
Joseph McMicking in 1960
Joseph McMicking in 1960

By the late 1960s Makati was the premier address for residences and businesses. Satellite residential communities—Bel-Air, San Lorenzo, Urdaneta, San Miguel, Magallanes, and Dasmariñas were developed to meet the surge in demand. Although Ayala remained family-run, succession planning was ingrained in every generation, along with a healthy appetite for risk coupled with a strong business sense.

The 1970s signalled the family’s sixth generation to take the helm of the company. The cousins Enrique Olgado Zobel (son of Jacobo) and Jaime Zobel de Ayala (son of Alfonso) took the mantle of leadership at Ayala. Jaime recalls his first days working at Ayala as a 24-year-old apprentice fresh out of Harvard College in 1958: “I ran errands, did secretarial work, and even tried learning how to drive a bulldozer. At first glance, these jobs seemed far removed from the kind of work I was to do eventually, but that was what our forebears did—they built from the ground-up.”

It was under this generation’s management that Ayala became more corporate in character, transforming into Ayala Corporation. The Ayala businesses became more progressive, less family-run, and more professionally managed. In 1968 Ayala Corporation was formally incorporated and in 1976, publicly listed. Though the Zobel families retain majority ownership in Ayala through Mermac, Inc, the company harnessed professional managers to manage its affairs.

At the ceremonial unveiling of the marker by the National Historical Commission acknowledging Ayala to be the oldest business house of Spanish origin in the Philippines
Veterans of the 1896 Philippine Revolution commemorate the proclamation of independence on the streets of Kawit, Cavite in 1937
At the Makati Nielson Tower, the country’s first commercial airport
The first Philippine bank note issued by El Banco Español Filipino de Isabel II
Listing of Ayala Corporation (AC) in the Philippine Stock Exchange, 1976
 
Jacobo Zobel (1902-1971)
Jacobo Zobel (1902-1971)

Enrique or EZ dramatically increased the value of Ayala’s real estate, generating huge profits from property trade. It was also EZ who entered into a venture called Globe-Mackay Cable & Radio Corporation, the predecessor of Globe Telecom, and a collaboration with Japan’s Mitsubishi companies, which was instrumental in investments in industrial parks, automotive, and water infrastructure.

In 1983 Jaime became chairman of Ayala Corporation. It was a time of political and economic turmoil for the Philippines following the assassination of Benigno Aquino, Jnr.

“I witnessed first-hand how certain events could affect our company. As a family group, we were responsible for the leadership and transformation of the partnership in the progressive years after the second world war,” he recalled.

Against a backdrop of crisis, Jaime consolidated and shored-up the Ayala businesses, making tough decisions to let go of unprofitable interests and reduce debt exposure. In the coming years, Jaime would take bold risks, such as the purchase by the Bank of the Philippine Islands of Family Bank & Trust Co, a move that would create the largest bank branch network and customer base in the country. He led Ayala to what business watchers call the golden age of expansion and rapid growth for the conglomerate.

Joseph McMicking with Alfonso Zobel and Enrique Zobel
Joseph McMicking with Alfonso Zobel and Enrique Zobel

Against a backdrop of crisis, Jaime consolidated and shored-up the Ayala businesses, making tough decisions to let go of unprofitable interests and reduce debt exposure. In the coming years, Jaime would take bold risks, such as the purchase by the Bank of the Philippine Islands of Family Bank & Trust Co, a move that would create the largest bank branch network and customer base in the country. He led Ayala to what business watchers call the golden age of expansion and rapid growth for the conglomerate.

Today, the family’s seventh generation—Jaime’s sons, Jaime Augusto and Fernando Zobel de Ayala—share the leadership of the Ayala conglomerate. The largest and one of the most diverse conglomerates in the Philippines, the Ayala business interests touch the lives of all Filipinos—from telecommunications to tap water to shopping malls, car dealerships, banks and microfinance.

“Part of the secret of our longevity as an institution has been a focus on reinventing ourselves over time. We always take a long, hard look at ourselves and stay relevant by turning Ayala into a company that continue to evolve and adjust to changing times,” said Jaime Augusto, chairman and CEO of Ayala Corporation.

Chairman and
CEO Jaime Augusto Zobel de Ayala, chairman emeritus Jaime Zobel de Ayala, and president and
COO Fernando Zobel de Ayala | Photography by Paco Guerrero
Chairman and CEO Jaime Augusto Zobel de Ayala, chairman emeritus Jaime Zobel de Ayala, and president and COO Fernando Zobel de Ayala | Photography by Paco Guerrero

Like their ancestors, JAZA and FZA (as they are known by all employees of the Ayala Group) have taken the company to unfamiliar territory—regional expansion with a venture in Vietnam, renewable energy, power generation and infrastructure—most recently the automated ticket system for Metro Manila’s overhead train services, MRT and LRT Lines 1 and 2.

“Nothing is guaranteed in business. You calculate your risks and take advantage of opportunities as they come. Not everything will work out, but you hopefully build a track record where you have more successes than failures. There will always be a component of our portfolio that is aligned with the changing economic needs of the country, the changing technology shifts and changing customer needs. We have always sought to align ourselves with the social and economic development goals of the country. As an example, the government has been keen to develop the infrastructure needs of the country by encouraging the private sector to put its capital to work on traditional public sector projects. Rather than sit back and complain that we need infrastructure, we decided to throw our hat in the ring and participate in the process of building,” said Jaime Augusto.

While Ayala may have professionalised and transformed into a high-performing organisation, it has not forgotten its core value of social responsibility and corporate citizenship. Long before the term “corporate social responsibility” was adopted by many corporations, Ayala Foundation (AFI) was institutionalised to harness the conglomerate’s resources for socioeconomic development and work with the individual units to initiate programmes that apply their expertise. Property unit Ayala Land, for example, developed an integrated community in relocation sites for informal settlers; while Bank of the Philippine Islands and Globe Telecom created Globe BPI BanKO, a microfinance institution that extends credit to the rural poor, fostering entrepreneurship.

Bea Zobel de Ayala, Fernando Zobel de Ayala , Enrique Zobel, Jaime Augusto Zobel de Ayala, Iñigo Zobel
Iñigo Zobel and Mercedes Zobel
The Zobel de Ayalas (clockwise from top left:): Jaime, Bea, Fernando, Monica, Jaime Augusto, Patsy, Sofia, Cristina, Bea Jnr
 

Ayala has found that the entrepreneurial spirit that has driven it for 18 decades is shared by many Filipinos, including merchants in its malls, retailers of Globe products, oversees workers’ families that bank with BPI, residents’ cooperatives in Manila Water’s distribution zone, and micro-entrepreneurs who benefit from BPI and Manila Water microfinance. As Ayala continues its expansion and diversification, it keeps an enthusiastic eye on the many thousands of people who will begin and build their own businesses through the ones it creates.

“By emphasising a social purpose, we achieve a more complete form of doing business and generating a cycle of prosperity,” continued Jaime Augusto.

AFI also supports the Centre for Excellence in Public Education (CENTEX), laboratory schools aimed at developing critical thinking and values-based leadership, and set up GILAS (Gearing-up Internet Literacy and Access for Students), a consortium that connects over 3,000 public high schools to the Internet. In keeping with the tradition of promoting art and culture, the Ayala Museum was opened in 1967. Today, it boasts one of the best collections of Philippine art pioneers as well as one of the most extensive collections of books and other materials on history, art, and social sciences through its Filipinas Heritage Library. Paying homage to the intimate history between Spain and the Philippines, the Premio Zobel award was established in 1929, recognising the best written works in Spanish in the Philippines.

One of the initiatives of the new generation of Zobel de Ayalas is the Ayala Young Leaders Congress (AYLC), an annual national summit that selects the best college students across the country to hone their potential to become the country’s future leaders. All Ayala executives, including Don Jaime and his sons, get directly involved in the AYLC. JAZA himself gets directly involved in different causes—from the World Wide Fund for Nature (WWF) to Children’s Hour; while FZA is the chairman of Habitat for Humanity Asia-Pacific.

Said JAZA: “Businesses have an important role in the broader framework of civil society. I started to dedicate about 15 to 20 per cent of my personal time to the non-profit sector as a way of building trust with broader communities outside my professional sphere. I wanted Ayala to be relevant to the socioeconomic development needs of the country and not just to its financial shareholders. We therefore began to integrate social development goals into the profit model that has made us successful.”

As Ayala marks its 180th anniversary, the eighth generation of Zobel de Ayalas prepare for the great responsibility that will undoubtedly be passed on to them, working just like their forefathers from the ground-up. Mariana, daughter of Jaime Augusto and Lizzie Eder, and Jaime Urquijo, son of Don Jaime’s daughter Beatriz Susana or Bea Jnr, are now working as corporate strategy analysts at Ayala Corporation.

After obtaining her degree in Social Studies from Harvard College in 2011, 21-year-old Mariana spent over two years as an international private bank marketing strategy analyst at JP Morgan in New York. Prior to joining Ayala last November, she also had a brief stint at the Department of Finance.

On the other hand, the 24-year-old Jaime Urquijo worked as an analyst on Wall Street after graduating from the Notre Dame University. He is also an avid traveller and a rugby player, suiting up with the Philippine Volcanoes.

“Family members potentially have roles in either the governance or executive side of the corporation, or even both. However, no institution can grow, be relevant and keep progressing on the back of only family executive leadership. It must be combined with progressive professional leadership. We have regular family council meetings that are separate from the Ayala board meetings, so that we decouple issues that are family oriented from issues that are business oriented,” said Jaime Augusto.

While JAZA and FZA now share leadership of Ayala Corporation, Chairman Emeritus Jaime is still the force that keeps the family together. For eight generations spanning 180 years, the journey from Casa Roxas to Ayala Corporation may have been paved with prosperity and adversity, but it is, at the very core, a story of the hard work, dedication, and family values of the Zobel de Ayalas.

  • Images COURTESY OF AYALA CORPORATE COMMUNICATIONS

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