I still could not tell if this move is good for Cebu City or not. I don’t have any knowledge or statistics of other companies who made similar moves.
Maybe something maybe lost in this, it’s pride.
Aboitiz is one of the largest companies in the Philippines, and them transferring to a rival city will surely make a dent in the Cebuano’s hearts.
Aboitiz to transfer HQ from Cebu to Manila
WITH over 70 percent of its profits coming from its business in Luzon, the Aboitiz Group is moving corporate headquarters of two of its publicly listed companies to Manila.
The decision was announced yesterday by Aboitiz Equity Ventures (AEV) chief human resource and quality officer Txabi Aboitiz and chief reputation officer Susan Valdez.
“We have come to a decision that we want to move our corporate headquarters for Aboitiz Equity Ventures and Aboitiz Power Corp. to Manila,” Txabi said in a news conference.
AEV is the holding and investment management company of the Aboitiz Group with core investments in power, banking and food. Aboitiz Power, its wholly-owned subsidiary, was listed in the Philippine Stock Exchange to provide financial flexibility for growth in the local power sector.
Txabi said they will retain the Aboitiz and Co. headquarters in Cebu and that their corporate office in Banilad will continue to operate, with core teams continuing services to other Aboitiz Group units based in Cebu and Mindanao.
These include units in real estate, construction, shipbuilding and corporate social responsibility.
The decision, he said, was arrived at because they wanted to be more efficient in their transactions and that the constant traveling required of their executives was becoming too stressful.
“We felt that it was important for us to be where the action is, which is in Manila,” he said.
He added that many of their business units have grown in the Luzon area for the last few years and that they have been discussing the inevitability of a move “for a long time.”
“From discussion to decision, it took about 40 years,” Txabi said.
Though they have always thought of moving to Manila, he said, the inconvenience then was not too great and that they wanted to stay in Cebu for as long as possible.
Functions that will be moving to Manila include the treasury, IT support, audit, human resources and legal departments while accounting and IT databases can remain in Cebu.
While Txabi could not give a specific time frame for the move, a statement released by the company said the relocation process is expected to be completed by June 2013.
The statement also quoted AEV president and chief executive officer Erramon Aboitiz as saying that the move has been in discussion “for generations,” as they transformed from being a regional company to a national enterprise and transacting with stakeholders based in Manila. Their main market and customers for electricity are in Luzon.
“Our growing investments in Luzon are demanding more and more of our attention. By continuing to be based in Cebu, we end up compromising many things in terms of being able to deal with these stakeholders more effectively,” Erramon said.
“Cebu will always be our heritage and our original home. But as professionals, we sometimes have to make tough calls and do what is best for the business. It is our responsibility to our shareholders, as well as to ourselves, to do what is necessary for what is best for the Aboitiz Group,” he added.
While technologies like video conferencing and other forms of digital communications have allowed them to remain headquartered in Cebu, company officials felt the technology could not replace official meetings and representations that have to be made in Manila.
Because traveling was an added cost, Txabi said, executives had to cram in appointments as much as their schedule would allow whenever they were in the capital.
Valdez added that meeting with regulators, bankers and heads of government agencies had to be held in Manila, where most central offices are.
Company executives announced the decision to team leaders Monday afternoon. Asked what the general sentiment was, Txabi admitted it was shock. “For all of us, it was very hard.”
Some 200 employees of AEV and Aboitiz Power are in Cebu. The company will work out who among them will have to relocate, although majority of the departments is expected to move.
The company assured they will extend “whatever assistance is necessary” to help those who may be affected by the relocation.
After the decision to move was made, Txabi said they will now work on how to go about it, by determining who among the employees should go and if there are any who ought to remain in Cebu.
Since they have hired some employees in Manila who had to move to Cebu, he said they will probably be first to have slots in their new offices there.
For employees who prefer to remain, he said they will try to find slots for them in other business units and swap positions with those interested to relocate to Manila.
“We are not in a rush. We will do it well, not right away,” he assured, saying team leaders will be asked to present their plans regarding the structure of their respective departments to ensure that the move will not make too much of a disturbance in their operations, and that they will not lose the talent they currently have.
Asked if the move has tax implications, Txabi admitted there could be but said figures, as well as the cost of the move, have yet to be figured out and discussed.
He assured that the move will not mean they will be seen less in Cebu, saying that they will continue holding the same activities that they have always had with Cebuano stakeholders for the past years.
Dondi Joseph, Cebu Business Club president: “The firm’s move (relocation) has no impact at all and it makes good business sense for them. It is refreshing to see a local company expand to Manila. Other companies of Aboitiz are expanding. Through their family foundation, they are active in the Mega Cebu project. This is an indication of their commitment to Cebu.”
Samuel Chioson, Cebu Chamber of Commerce and Industry president: “There is no effect since it is business efficiency that they are doing in their operation.”
Eric Mendoza, Mandaue Chamber of Commerce and Industry president: “It was a business decision. The Aboitizes are exemplars of very successful Cebuanos with global business operations.”
Cebu Gov. Gwendolyn Garcia: “As they continue to conquer new grounds, they will always remain as Cebuanos. They will continue to be a great pride of Cebu. I know that whereever the company may go, whereever the infrastructure may go, whereever the outfit may go, in the end, they will always come home and home is Cebu.”
Cebu City Mayor Michael Rama: “In expanding their empire, it will help not just Cebu City but the entire country. The move is understandable because Manila is attractive for business while Cebu City is more for tourism.” Erramon Aboitiz’s being awarded the top Chief Executive Officer of the country may have also contributed to the decision to move to Manila.
Cebu City Rep. Tomas Osmeña: He was not surprised, saying evolution is a long-term process and a world-wide trend. He remembered that the old headquarters for Aboitiz was in downtown then it was transferred to Banilad because the officers were living in Maria Luisa. “Where the CEOs live, that’s where the next corporate headquarters will be.”
Cebu City Vice Mayor Joy Augustus Young: “Manila is a bigger market but their core business here will stay so I think it’s okay as of the moment. It will depend on what they decide to do with their business here later.”
Cebu City Councilor Alvin Arcilla, chairperson of the Council’s committee on trade, commerce and entrepreneurship: Aboitiz will still have various real properties and commercial development in Cebu City. “It’s hard to leave Cebu City especially business-wise.”