Lopez Holdings

 

Good evening Ladies and Gentlemen.

There is nothing a son wants more than to make his father proud. However, I have to admit that I was far from the ideal and perfect son growing up. I still remember the scolding I got after jumping into our seven-foot pool from a two-story roof at nine years old. Then 15 years later I remember getting the same look from my parents, but minus the scolding, when they discovered I had jumped out of a single engine Cessna flying 3,000 feet over Batangas. Never mind the small detail that this time I had a parachute but their faces said it all: "Piki, why on earth did you do that and what were you thinking?"
 
This year, as FPH and I both turn 50, many things have come full circle. As I think about the future of the First Philippine Holdings group, I can't help but reflect on the past. It amazes and at the same time terrifies me when I consider the breadth and scope of businesses my grandfather, Eugenio Lopez Sr., brought us into. When I think of the leaps and bounds he made from first dominating the sugar industry then spinning on a dime after more than a hundred years of family history with sugar and shifting his fortune into public utilities with the purchase of Meralco for USMM. It was a huge strategic bet. Probably the largest purchase in the region at that time, being four and a half times larger than the original purchase of PLDT by the Cojuangco family from its American owners General Telephone and Electric. He made daring moves into the transportation industry as well with fast ferry services, bus lines, and even a domestic and regional airline that predated Philippine Airlines, Japan Airlines and Cathay Pacific by almost a decade. He and my Tito Geny Lopez likewise took the same bold strides in media from his El Tiempo, Iloilo Times and Manila Chronicle newspapers into the radio, television and the cable TV business with ABS-CBN. These may not seem like daunting industries today, but back when those decisions were being made to invest millions he was, more often than not, the pioneer at a frontier that had not yet been walked on by Filipinos. So I ask myself at the dawn of our next 50 years, but with a note of awe and admiration: Lolo, how on earth did you do that and what were you thinking?

For us, even in death, he was always larger than life. The shining era we fondly remember in the group is termed the "Golden Age" of Meralco and Meralco Securities Corporation (MSC) from 1962 to 1972. After Lolo had taken over from the Americans in 1962 he was faced with three main challenges. First, was to meet the staggering demands of Meralco's franchise area, then growing at more than 10-12% per year. Existing power plant and distribution capability needed to rise by more than 3-4 times in the next ten years.or an additional 1,100 MW. Second, was the challenge of financing this upsurge in capacity. Funding the acquisition was tough enough but finding the banks to lend for this tremendous growth in capacity was a challenge in itself. Third, was finding and training a new team of Filipinos to run Meralco at a higher performance level than its former American owners.
 
In all three challenges, Lolo proved tremendously successful. Meralco's franchise customers doubled during this period. He added a new power plant every 18 months and augmented Meralco's capacity by more than 1,110 MW. Their power rates were the lowest in Asia and lower than those in more than 43 U.S. states. In the area of customer service, he pioneered the 48-hour connection time for new users and the first 24-hour customer service in the country with response time of less than an hour. This expansion drive also created a bevy of pioneering businesses for our group as Meralco sought to backward integrate its own requirements. It established the first transformer manufacturing facility in the country, the first oil pipeline, the first lube oil refinery, and the first construction company specializing in the design and building of power plants. It also had the controlling stake in PCIBank, then a necessary adjunct of any growing conglomerate. By the early 70's it was the only conglomerate to have two subsidiaries worth more than a billion pesos. It was in many respects, truly a "golden age".

But the good times would not last.
 
On September 21st just 8 days and thirty-nine years ago, this golden age for MSC as well as the hopes and dreams of many Filipinos living at that time came to an end with the declaration of Martial Law and the forcible takeover of all our major businesses. This was the consequence of Lolo's intransigence exposing Marcos' corruption and hidden wealth in his newspapers way before they came to light a little over a decade later. He was made an example to instill fear in any of the business elite wanting to challenge the power of the new regime. Lolo died of cancer three years later in 1975, financially broken.

The fourteen years that followed for our family were our years in the wilderness. Life was uncertain, we had to economize drastically and because of the cloud of fear that pervaded the country we were somewhat shunned socially. During those years you could almost hear others questioning why Lolo felt compelled to take a stand for integrity and social justice against a powerful dictator, like people were saying: Why on earth did he do that, and what was Don Eugenio thinking?

But even then, many underestimated the true power of that legacy he left us. Former British prime minister and novelist Benjamin Disraeli once wrote that "The legacy of heroes is the memory of a great name and the inheritance of a great example." And sometimes it's the calm and silence of those wilderness years that allow a rekindling of the fires preparing you for greater things.

My Tito Steve Psinakis always had a framed copy of Rudyard Kipling's poem "If" on his desk side. I'm sure you're all familiar with it. For him, and even for me, it's a reminder of where true north should be in the face of life's ups and downs. Long after you've read it for the first time, its words stay with you and selected passages spring out in relevance at various stages of your life. There's one that leaped out at me the other night as I was thinking about what to say in this speech. It's the phrase that says, if you can "watch the things you gave your life to broken, and stoop to build them up with worn out tools..." This, Lolo had to do several times in his life. In August 1928, when a powerful typhoon destroyed 60% of his sugarcane crop and almost wiped him out financially. Then again in 1941, during World War II, when all the aircraft of his pioneering airline INAEC were bombed by the Japanese and all his buses were commandeered by the United States Armed Forces of the Far East. But each time he did, he would always accept his circumstances with great composure and proceed to rebuild from the ashes with not a trace of bitterness or rancor. In fact he would do so only with the same infectious zeal and enthusiasm he was so known for.

A few years after the government takeover in 1972, MSC was renamed First Philippine Holdings Corporation (FPHC). It later embarked on a massive diversification into failed ventures like oil exploration, coffee trading, financial services, credit cards and an ill-timed expansion of its transformer manufacturing capacity. To fund these, they took on considerable dollardenominated debt that brought FPHC on the brink of collapse with the onset of the Dewey Dee crisis and the turbulence caused by the 1983 assassination of Ninoy Aquino.

When dad returned to FPHC after Marcos fled the country in 1986, he returned to a company that was adrift, practically bankrupt and in danger of keeling over. Yet he acted with the same equanimity and resilience displayed by his own father at various times in his life decades earlier. Even as he saw the things he and his father gave their lives to, broken, he soldiered on, in Kipling's words, "to build them up with worn out tools."

His first and most important task was to get the near-capsized ship back on even keel. For this, my dad always relied on the consistency and level-headedness of Nonoy Ibanez who still continues to play the role of stabilizer in many of our most important decisions today.

To propel the ship forward, he had to fire up and ignite the drive of those around him. This I saw when Tito Steve Psinakis and Ernie Pantangco spearheaded FPH's re-entry into power generation with the 225 MW oil-fired plant in Bauang; when Tito Manolo united Meralco on the warmth of his concern for employees; when Peter Garrucho with the help of then FPH board member Tito Cesar Buenaventura made those vital and key initiatives that pulled into place the gargantuan Philippine Natural Gas project.

As we were pulling the First Gas projects together under our mentor Peter, Tito Steve liked to call Giles Puno, Ricky Tantoco, Jon Russell and myself, the "young Turks full of piss and vinegar". He used the term interchangeably with either endearment or displeasure depending on whether we were locking horns with him or not on some issue.

It's amazing how the bar just gets higher with time. The First Gas projects put in place 1,500 MW of power generating capacity in less than 5 years. That was 36% more than the 1,110MW of plant capacity built during Meralco's "ggolden age" and done in half the time. Again within the next seven years, FPH through First Gen would acquire another 1,300MW of both geothermal steamfield and power plant capacity from the privatization of NPC and PNOC-EDC. Today us young Turks aren't so young anymore. And hopefully, it's not vinegar but red wine we're expelling these days.

Although we now live in a world of black swans and uncertainty, and we've since sold and passed on our regulated franchise monopolies like Meralco and MNTC into good hands, what comforts me at night is that today we have a great team and platform of businesses from which to launch yet another new golden age, possibly taking the best of the Filipino to the global arena. It's that strengthening combination of pain from setbacks, adversity and even mistakes, and the dauntless spirit of the champions that have come before us that have etched many great lessons in the hearts of all of us at the helm today.

So tonight, I also pose some challenges of my own to all our officers and employees:

Firstly . We all consider each other Kapamilya. Are we indeed building a workplace that everyone can call a second home? And does it have a heart? Is it built on a shared empathy that gives us the capacity to step into the next person's shoes and feel what that person is feeling? Are we a group that has a natural urge to go that extra mile for our employees because we're in turn surrounded by people who care for the company like one of their own?

Secondly- All of you have individual strengths. You all bring something unique to the table otherwise you wouldn't be working here. Are we working as a team and a community that can effectively bring out the best in everyone and collectively leverage on each other's strengths?

Last but not least - Do you have the passion to lose yourself in something bigger than you? Because that is what our work at FPH and the Lopez group has always been about. It's not just about building a company, it's about building a nation, and everything about making the world a better place.

Dad, there is no doubt in our minds that we will meet your five challenges. We WILL make you proud.

But more than that, we assure you, that at the dawn of THEIR next 50 years the next generation of leaders at FPH will be asking us with that same tone of admiration we have for all of you: How on earth DID you do that, and what WERE you thinking?

Thank you very much and I hope you enjoy the show we have for you tonight!

Mailing List

Please enter your email address to join our mailing list and receive our corporate updates.

CONTACT US

Lopez Holdings Corporation (formerly Benpres Holdings Corporation)
4/F Benpres Building, Exchange Road, 1605 Pasig City, Philippines

  • Trunkline: (632) 449-2345
  • Fax: (632) 634-3009