We Don’t Cut Corners: Guillermo Luchangco

The 1980s saw the Philippines transition back to democracy and the restoration of its civil, social, labour, economic and political rights after the downfall of its martial law regime, which left the country drowning in foreign debt and many of its people living in poverty. At the same time, the government started to open up the economy to international trade in efforts to rejuvenate the fledgling economy.

Near the end of the decade and into the 1990s, a number of foreign companies soon became enticed to move their manufacturing into the Philippines, taking advantage of the country’s reputation for low-cost production and high efficiency. However, coming from the developed world, many of these multinational companies were used to operating in economies with well-developed infrastructure – something much of the Philippines just didn’t have intact.

"We have a passion for creating green, environmentally friendly industrial parks, not smokestack factories."

"If you were to put up a manufacturing plant in the foothills of the Appalachian Mountains in the US, the government would be willing to run the electricity, the water and anything else to you. But in the Philippines that wasn’t the case," says Science Park of the Philippines Inc (SPPI) Founder, Chair and CEO Guillermo Luchangco.

"Here, you had to worry about utilities and also delays with the government if you were trying to locate outside of the main city, metro Manila. It wasn’t a simple process. That is when I saw the opportunity to develop industrial parks that would take care of these problems."

So, in 1989, Guillermo founded SPPI – one of the foremost developers of private industrial parks. And it didn’t come a minute too soon. Foreign manufacturers flocked to it, the first industrial park of its kind in the country, to help them set up shop.

Today, SPPI has gained a reputation for being a pioneer and leader in private industrial estate development in the Philippines. Boasting the largest hectarage of private ecozone industrial estates with nearly 800 hectares of aggregate area and six unique industrial parks, SPPI is now the home to Fortune 500 companies and other major multinational bigwigs such as Procter & Gamble, Pepsi, Unilever and NEC to name a few.

"Creating SPPI, one of the leading industrial estate development companies in the Philippines from scratch, having had no prior experience at all in property development of any kind, has been my greatest achievement," Guillermo beams.

"I was able to make it work even in the face of competition from some much larger Philippine conglomerates, many of whom are in joint ventures with foreign partners, because I put my heart and soul into it."

Leading the way

An engineer by trade and a hands-on leader at heart, Guillermo finds himself heavily involved in all aspects of the business. "I am all over the planning details of the industrial estates and administration buildings, the services we offer and how we go about addressing the needs of our locators, which is what we call the companies that come into our industrial parks," he explains. "I get very involved in that, and I make sure we’re always one step ahead of the competition in providing such services."

SPPI, for example, was the first industrial real estate developer to introduce fire engines to each of its parks. To make it work, onsite fire stations and bunkhouses were erected and the company’s security guards received training in firefighting. "They became so good that they actually started winning firefighting competitions against other firefighting units," Guillermo boasts. "Of course, the guards receive extra compensation for training and staying over in the bunkhouse after their shifts, allowing us to have a 24-hour firefighting crew always available."

And in response to the typhoons that regularly hit the Philippines, leaving flooding in their wake, Guillermo ensured SPPI’s parks would always be protected. "We have increased the provisions so that none of our parks will flood during severe typhoons," he says. "We’ve been operating for a little over 30 years now and, so far, we’ve never had any flooding in our industrial parks."

The innovative company’s advantage over the competition remains its ability to provide a complete infrastructure replete with a reliable electric grid, steady water supply system, security and services and amenities, including transportation within the estates, bank and healthcare facilities, and even freight forwarding. And it does it not only to remain at the forefront of a competitive industry, but simply because it’s a point of pride.

"The three pillars on which all the companies in the group are built on are quality, integrity and ethics," Guillermo says. "Everybody in the company knows this. In all of the industries in which we operate, we ensure that we’re providing good quality, maintaining honesty and offering fair value to both our customers and the government. We don’t cut corners."

"We have partners who have been with us a long time because their standards match ours."

And that goes for customer service too, where the emphasis is always on quality and responsiveness. SPPI is a true leader, which is proven time and again, but especially when its industrial estates sell out.

"When we sell out, we offer the locators’ association the opportunity to keep our services, managing the park," Guillermo explains. "And in all of our parks – we’ve already sold out four – they have asked us to continue managing for them. And it’s all because we have the best on-the-ground management team."

Forward thinkers by nature

Noting the devastating effects of climate change, Guillermo believes it’s part of SPPI’s corporate social responsibility to do as much as it can to lessen its impact on Mother Earth while creating value for the communities that it serves. "We consider ourselves forward thinkers by nature as we are determined to take care of the environment," he stresses.

"This dedication has led us to becoming a pioneer, implementing a wastewater treatment system where all of the wastewater from our locators filters through one common facility. It helps us control the pollution. And I’d venture to say that the water we return to the stream is cleaner than the water that’s found there naturally."

In addition, the company regularly organises tree-planting campaigns that provide benefits for the environment and the beautification of SPPI’s estates. "It helps set the standard for the companies that come to our parks," Guillermo explains. "We ask our locators to provide proof that they will not be polluting the environment with their operations and that includes air, water and noise pollution. We have a passion for creating green, environmentally friendly industrial parks, not smokestack factories."

As a result, SPPI has been awarded a Hall of Fame citation for its environmental accomplishments by the Philippine Eco Zone Authority. And it’s always on the search for innovative ways to make improvements in its current and future parks.

"We are constantly looking out for new innovations in industrial estates. We visit similar estates in other countries and keep track of new developments around the world that may be relevant to us here in the Philippines," Guillermo says.

"For instance, in our latest park, we are shooting for LEED certification for the entire park, including the administration building and the solar panels on its roof. The park will have five ponds built along the banks of a creek that runs through it, helping with flood control. And we’re looking to see where we can introduce artificial intelligence into the mix as well."

To bring this new LEED-certified park to fruition, SPPI is working closely with a masterplanner outside of Boston in Massachusetts called Sasaki & Associates. "They utilise natural elements in planning the estate, which take into account the arc of the sun from sunrise to sunset and the direction of the winds that pass through the area," Guillermo shares.

"We are constantly looking out for new innovations in industrial estates. We visit similar estates in other countries and keep track of new developments around the world."

When it comes to business partnerships, SPPI believes in forming true relationships that are aligned and result in a win–win for both parties. Some of the most successful of these relationships are with partners such as JC Rodriguez Construction Corp, Cyber Age Construction Corp, Hydrex Asia Limited and DCCD Engineering Corporation. "The basic tenet is that we feel like we’re engaged in the business relationships," he says. "We want both sides to be happy. We have partners who have been with us a long time because their standards match ours. We want excellence, and we want good, reliable partners, and that’s what we’ve found."

In the earliest stages of COVID-19, there was uncertainty and even fear as to how the business world would be able to cope under its incessant wrath. As a business in the Philippines, Guillermo says SPPI has been "under one form of quarantine or another since March 2020" and, as such, the first item on his agenda was to anticipate the effects the pandemic would have on the business overall.

"We had to try to determine how our company would fare in the face of the pandemic because that would really dictate how we could cope for our employees and determine what we could do for our country and the economy as a whole," he says.

SPPI took into account the perceived impact the pandemic might have on the demand for its industrial estate lots with companies cancelling or postponing their plans to introduce expansions or new projects. And it compared those findings with its resources to determine the best measures to take, ensuring the continuity of the business.

"Fortunately, we didn’t have to lay anybody off. Although, at the start, we did reduce the number of workdays our employees could come in, but we still allowed them to apply vacation and sick leave against those days off, so they didn’t suffer any actual loss of income," Guillermo says. "Today, we no longer have any employees on a reduced work week and our fringe benefits have also since been restored as we found it capable of surviving the threats of the pandemic so far."

Looking beyond itself, SPPI, together with the ICCP Group, donated PHP50 million (US$1 million) towards the country’s efforts to counteract the negative effects of the pandemic. Another sister company, Manila Exposition Complex Inc, offered the government the use of its World Trade Center Metro Manila for six months as a Heal As One Center for those undergoing COVID protocols.

"We specifically targeted those groups of people who would be out of jobs as well as those already living in poverty, who needed help procuring their most basic needs," he says. "We also provided assistance to various local governments and communities in the areas where we operate our industrial parks by donating rice, assisting in monitoring the ability of workers to get to work and so on."

While the pandemic has certainly been a challenge, there have been some positives that have arisen in light of its devastation. "Many things came to pass with the advent of COVID-19, but not all of them have been bad for our business," Guillermo shares. "Some good things have come out of it. For example, the pandemic has created the need for some companies to move their operations to less expensive regions, creating additional demand for industrial lots in countries like the Philippines. In addition, since the start of the pandemic, a number of foreign companies have also made the decision to move some of their operations out of China and into neighbouring regions; again, creating demand for us."

Now Guillermo is focusing his attention on how the new normal will look for SPPI. "I’m excited for what each new day will bring. I’m proud that SPPI has grown to what it is today – a company known for quality, ethics and integrity."

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