Typhoons, tax changes, the Asian economic crisis of 1997, political instability. They’re just a few of the challenges that Industrial & Transport Equipment (INTECO) has weathered in the past couple of decades. Rather than being overwhelmed, Group President Raymond Jarina says the challenges have simply forced the family business to find new ways to operate. “Companies should live and stay forever,” he says.
It’s an attitude he’s tried to instil in his 2 sons, who are now running the group’s Chevrolet dealership. “There are a lot of family businesses that have failed because there was no passion or drive among the kids in the second, 3rd or 4th generation,” he says.
Three ingredients for a successful family business
Raymond believes 3 ingredients are vital to the success of a family business. “First and foremost, a family business will not succeed if there’s inadequate communication. It’s very important that family members talk. It’s also crucial that the principals talk with the employees and that there’s an open exchange of ideas and recommendations. Then they should form the basis of future marketing and strategy.”
“Second, you need to have passion. You should have passion for what you represent, your products, your services and yourself. And that passion should increase as the generations go on, because if it goes the other way it’s not going to do the company any good. The third ingredient lines up with the company’s logo. “You just have to really care. Whether it’s profitable or not, caring gives you a strong sense of worth in the eyes of your customers and in the eyes of the industry. Once you have those 3 factors in place, I think there’s always a way to get over whatever challenge gets thrown at you,” he says.
“We were able to align resources, determine target markets, and implement strategic actions to capitalise on the growth.” – Raymond Jarina
Establishing INTECO
Passion for the industry is something that Raymond has in spades. He traces his love for engines back to his high school days. “I used to work as a technician during my high school years. I’d go to the office and just tinker around with the engines.” When he went to the US after graduating with an economics degree from Ateneo De Manila University, his plan was to work in the banking industry. “By some blessing of fate, I ended up working in the automotive industry for General Motors and Nissan,” he says. Armed with an MBA from the Drucker School of Management at Claremont Graduate University, he returned to the Philippines in early 1998 to take over the family business.
His family purchased the Isuzu dealership in Manila through a stock transfer in 1994. Apart from the potential of the Isuzu product, Raymond could see a growth opportunity to ride the wave of small-to-medium businesses growing strongly in the Philippines. “A lot of the business owners I knew from college, they were like friends of mine, so we started in business and grew together and that really helped produce good numbers for the company. It was actually a good time that we came in. We were able to align resources, determine target markets, and implement strategic actions to capitalise on the growth in the population of the Philippines.” Assistance also came from the banking sector. “There was movement in the banking industry to aggressively extend automotive loans to customers for the purchase of brand-new vehicles for personal and business use.”
Things continued to fall into place with the launch of the Isuzu Hi-Lander, which proved very popular. “That was really the bread and butter for our company,” says Raymond. Another factor was the establishment of the Isuzu Philippines Corporation in 1997. It brought together Isuzu Motors of Japan for the product side, Mitsubishi Motors of Japan for the marketing, and 2 local banking partners, Ayala Corporation and Rizal Commercial Banking Corporation. “It became a distributor of the Isuzu vehicles to the Philippines, and we’ve represented the brand since then. We were able to expand in quite a lot of markets in the north-west. It had 2 branches when I took over. We’ve grown now to 6 Isuzu branches since 2003, and in 2013 we added the Chevrolet dealership. So we have a total of 7 dealerships in the group.”
A family that cares
Behind the numbers is the personal approach that goes hand in hand with being a family business. “Our philosophy is: ‘Be a part of the family that cares’,” says Raymond. It’s an approach that extends to customers, suppliers, banks and the community. Employees benefit too — INTECO covers employees, their spouses and children with a medical insurance program. “We have standard vacation leave and sick leave, employee advances, and monthly incentives which are driven by the numbers at the end of the month. In any business, profitability is key, but having that family feel makes it more personal, which basically is a good way to achieve repeat business.”
On the horizon is another challenge in the form of tax reform, which will significantly increase the price of brand-new vehicles and the price of fuel for privately owned vehicles. “The government is trying to move towards a no-tax policy for lower-income families,” says Raymond. “That’s the biggest challenge not only for INTECO but for the automotive industry as well,” he says, adding it will also affect the banking industry and its suppliers. Raymond is anticipating the reform will affect 60% of its vehicle models. “It’s going to be a big hit, especially for the cars and the SUVs.”
Having weathered many other challenges, he’s confident about finding a way to manage this one. “Despite everything, the market corrects itself and finds equilibrium eventually. You just need to prepare yourself for the time in between.”