Book 9: Give and Take

Foreword – Henares, Industrialist
by Alfredo Tomas “Atom” Henares, son and businessman

            My father, aside from an engineer, is a graduate of Business Administration and is a Doctor of Economics.  As soon as he was graduated from the Massachusetts Institute of Technology, he was offered a job with the Standard Oil Company of New York (Esso) in their China operations.  However China became involved in a Civil War between the Chang Kai-chek’s Kuomintang and Mao Zedong’s Communist Armies.  So my father decided to decline the job offer, and return back to the Philippines.  He was met at the airport by Don Salvador Araneta who offered to hire him as Dean of the Graduate School of Management Engineering in the Feati University, and Sotero Laurel who offered him the deanship of the School of Commerce of the Lyceum University.  Dean Alejandro Roces of the Far Eastern University Liberal Arts, convinced my father to accepted the deanship of Lyceum and Feat, saying that “Ateneo and La Salle are full of spoiled brats and highly paid professors.  It is the students of the middle class schools who will make history someday.  And we should be there to guide them.”  And this the students of Lyceum, Feati and Far Eastern did in the First Quarter Storm and as guerrillas against oppressive tyrant, President Marcos.

            My father in 1949 assumed the presidency of the family firm, H. G., Henares & Sons Inc., then manufacturing MC Asbestos Paint, made essentially of asbestos powder, clay and emulsified asphalt – a water-based paint that dried up waterproof and fire-proof, and invented by my grandmother after a disastrous Tondo fire.  The paint was primarily intended to render sawali (a wall siding made of thin bamboo slats) weatherproof and fire-proof for use in houses of the poor.  The paint acquired acceptance as a roofing paint for corrugated steel sheets and ceramic tiles, and eventually all police outposts and almost all house roofs in Metro-Manila were covered by this paint.  It was this paint and the “charcomobile” (a device to use charcoal as a fuel for cars during the Japanese Occupation) that became the source of the family fortune.

            My father used to say that a man starts his productive life with a field of specialization – as an engineer, a lawyer, an accountant, a doctor, a mechanic.  But as he advances in the organization, as he climbs higher up the corporate ladder, he becomes less specialized and more generalized, and is ushered into the field of management.  A manager of a factory has to know enough of engineering to know how a product is made and how it could be made better, enough of accounting to read a financial statement, enough of law and human psychology to manage his relations with his employees, business associates and the consumer.  It is the general manager who directs the specialized employees under him – the engineer, lawyer, accountant, technicians – and leads them towards a common objective.  My father used to say that the running of a manufacturing enterprise requires 4 M’s: — money, machines, materials, and the management which combines the first three M’s in productive and profitable relationship.  The four pillars of a business enterprise are: the investor who provides the money for financing, the government which takes care of the business environment, the employees who provide the labor, and the consumer who buys its products.  It is management that ties them all together – giving the investor an adequate return for his investment; the government the taxes that it needs to run the country; the employee a fair compensation for his work; and the consumer his wants and needs with the highest quality at the lowest price.

            My father was billed as “the first Management Engineer” in the country.  It was in this role that he was Dean of the Graduate School in Feati, Dean of Commerce in Lyceum, a professor in the University of the East, and a special lecturer in La Salle, UP and Ateneo.  It was in this role that he managed his father’s firm, and expanded its line into 56 products, including pigments and resins for the paint industry, and office and school supplies – blackboards, chalks, erasers, the Old Town Carbon Paper, Eberhard Faber’s Mongol pencils, Binney & Smith’s Crayola, Parker Pen’s Quink ink.  He made H. G. Henares & Sons Inc., the 200th largest corporation in the Philippines, and earned his first million (when the peso was P2 to a dollar) at the age of 30.

            Earlier, he told his father, “The trouble with working with a father is that one does not know whether he is being spoiled or exploited, whether he is being overpaid or underpaid.  The only way a man finds out what he is really worth is to seek work in the open market and work for someone else.  Papa, why don’t you allow me to be employed elsewhere while you’re still around to pick up the pieces if I fail?  It would really be tragic to find out I am a failure when you are no longer around to help me out.”  My grandfather wouldn’t think of it, because he wanted to retire, so he proposed, “Why don’t you work for others on a consultancy basis?  JP Marcelo wants to buy the Manila Hotel, you can be his consultant in determining the business viability of the proposed purchase.”

            My father talked JP Marcelo, a tycoon manufacturer of rubber shoes, out of buying the government-owned Manila Hotel, arguing that while the hotel is thriving, its collectibles are uncollectible, the debtors being mostly government officials with signing privileges.  Instead he talked Marcelo into buying the government owned NDC Nail Plant, which was in dire straits because government officials bought ten year’s supply of nail wire worth P10 million in the process of lining their pockets.  My father reasoned out that because of the Korean War, the price of steel will go up.  So he contracted to buy all the machinery at its inventory value P100,000, and the 10-year supply of nail wire at current FOB price in New York, deliverable in Manila in dribbles as the Marcelo firm needs it, thus saving Marcelo the heavy cost of inventory and the cost of shipping and insurance, a fair deal all around.  My father arranged to have the Marcelo firm now a pioneer in steel fabrication, tax-exempt of all taxes and its products protected by tariff barriers.  Needless to say, JP Marcelo profited 500% annually on his original investment.  And for his services, my father was paid enough to send for his sweetheart in San Francisco, Cecilia Lichauco, so that they can be married in style.  They were married in the Church of Our Lady of Sorrows, the same church Ninoy and Cory were married in, and the reception was held in the plush Fiesta Pavilion of Manila Hotel.

            Next thing my father did was to be the business consultant of a partnership between an individual named Maximilian Zalevksy (a Russian Jew thrown out of Shanghai by the Communists) and a corporation owned by Doña Magdalena Ysmael (a Lebanese immigrant whose husband made money with the influence of politicians) – a funny set-up, a partnership between an individual and a corporation.  It undertook to manufacture Admiral Refrigerators and office filing cabinets.  Ysmael did not want to put out any cash but gave a 5-hectare lot in Quezon City to the company.  The lot was offered as collateral for a loan to finance the factory building, which in turn was offered as collateral to finance the purchase of the machinery, which in turn was mortgaged for a loan to supply the working capital.  The Ysmael Steel Co. prospered speedily with a complete monopoly of the refrigerator market, and my father got his classmate Dante Santos to be appointed as the General Manager.  The Ysmael family began to take interest in running the firm.

            Credit is important the in the financing of any business enterprise.  My father realized that early as a student in MIT in Massachusetts, when he got himself a credit line in the Filene’s Department Store in Boston, purchased his personal school supplies, went back to his dormitory and wrote out a check for what he owed, all in the same day, thus establishing his credit standing on record, with his ability and willingness to pay his obligations.  In this connection, his old friend Don Jose Tiosejo of Superior Gas and Equipment Co. (Sugeco) asked help for the settlement of a two-year old bill for P1 million unpaid by Ysmael Steel Co.  My father asked that Ysmaels pay the bill.  But Old Money has its bad habits.  Old man Tiosejo received a check for P200,000 accompanied with a quit claim form that released the Ysmaels from paying the rest of the P1 million debt.  Disgusted, my father quietly resigned, later followed by Dante Santos.  H. G. Henares & Sons, together with Justice Carmelino Alvendia and Dante Santos set up a new company, Philippine Appliance Corporation (Philacor) to manufacture Westinghouse refrigerators.  It surpassed Ysmael Steel.  Later when Westinghouse wanted 40% of the company, H. G. Henares & Sons sold its equity.  Max Zalevsky died in a car accident in Italy, and the Ysmael Steel fell under the management of Philip “Baby” Ysmael who was more interested in playing footsie with Marcos and horse racing in Australia.  And so the Ysmael Steel Co. passed out of existence.

            My father was sufficiently confident to offer his clients a guaranteed increase in the profitability of operations, and be paid as a fee 10 percent of the increase in profits.  He became the consultant for the Philippine American Life Insurance Co. (under Earl Caroll), the Government Service Insurance Corporation (GSIS, under Pio Roa, his former professor I believe), the Lexal Laboratories (under Andy Liboro), the National Printing Co. (under Jose Fernandez Sr., father of Jobo, later Central Bank Governor), Rattan Arts (under Ethel Garcia).  Only in his thirties, my father found himself a man out of his time and generation, closer to his classmates’ fathers than to his own classmates: Aurelio Montinola Sr. of Amon Trading, Don Andres Soriano of San Miguel Corporation; Don Gonzalo Puyat of the Puyat Enterprises; Don Toribio Teodoro of Ang Tibay shoes; JP Marcelo of Marcelo Rubber.  As vice president of the Philippine Chamber of Industries, my father was a favorite of Don Andres Soriano, as his secretary Miss Martinez attests, his office doors were open to my father anytime, while his big executives cooled their heels in his anteroom, begging my father to whisper a word into Don Andres’ ear on their behalf.

            My father was the mainstay of the Philippine Chamber of Industries which his father and JP Marcelo founded.  He served as Chamber vice president for 12 years before being adjudged old enough to be the President.  He was adjudged Young Businessman of the Year, and Industrialist of the Year in consecutive years by the Business Writers Association of the Philippines.  He was elected President of the Philippine Chamber of Industries twice before being appointed to the cabinet of President Diosdado Macapagal, as the Chairman of the National Economic Council, a constitutional body composed of the Senate President, the House Speaker, the private sector and the Executive Department – with awesome powers to formulate the national economic policy, adjust tariff rates, and administer foreign development funds.  As such, he re-studied the effects of the Laurel Langley Agreement, preparatory to its being abrogated; denied the vested right of Americans to continue their parity privileges beyond the expiration of the Laurel-Langley Agreement; set up the ammunitions plant in Bataan with the help of and despite the anti-war constitution of the Japanese, reducing our dependence on the Americans who limited our army to only 3 days ammunition; adjusted tariff rates under an obscure section of the Tariff Code; made the economy grow at the rate of 10 percent per annum, the highest in Asia; and stabilized the value of the peso at P3.90 per dollar for ten whole years into Marcos’ first term of office.  The forex rate did not deteriorate till Martial Law and the IMF Conditionalities, from P3.90 to P18.00 per dollar during the Marcos dictatorship; from P18.00 to P28.00 per dollar under American pressure and globalization during Cory’s time; from P28.00 to P38.00 per dollar during Ramos’ time; from P38.00 to P56.00 per dollar during Erap’s time.

            Such are the experiences of my father in the field of business.  It is no wonder then that when he retired and went into the media as a columnist in the Philippine Daily Inquirer, writing about PLDT, Meralco, Philippine Steel, PAL Building scandal, Petroscam, and Bulletin – he wrote the finest pieces of investigative reporting this side of the globe.  Unlike many writers he can read a financial statement in exquisite detail – connecting various accounts in various years to find that PLDT has bought their telephone equipment at 3 times what the world price was at the time – connecting a footnote on page 64 with an innocuous statement on page 8 in a report, to uncover a scandalous anomaly in a major transaction.  His meticulously drafted reports on business scandals landed on the front pages of Philippine Daily Inquirer and changed the business landscape of the nation.  That and my father’s daily column Make My Day made the Inquirer the No. 1 paper of the nation, surpassing the Manila Bulletin and staying way ahead of Philippine Star.

My father is indeed one of a kind, a true Renaissance Man, a businessman and an industrialist who is also an economist, a writer and columnist, a movie maker who won the Famas Award for Documentary Film, an electronic hobbyist who makes his own TV sets and burglar alarms; a lover of books and the performance arts, a computer enthusiast, a public servant, and Rectonian nationalist.