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People putting DMCI at the forefront of business

Interview - October 9, 2012
DMCI chairman Mr. David Consunji attributes its hard-working employees as reasons for its success in the construction and engineering area. Having spent time as a concrete inspector, Mr Consunji talks to United World about the fortunes of an exceptional company, aided by the will of its people throughout all projects.

With the economic and international attentions shifting towards Asia, this part of the world has been noted as an engine of economic growth. The Philippine economy grew by 5.9% in the second quarter of 2012, the country’s GDP growth rate was higher than Malaysia’s 5.4%, Thailand’s 4.2%, Vietnam’s 4.4%, and Singapore’s 2%, outpacing most of the economies in Asia. As someone who has been incredibly successful in the Philippines, what are the competitive advantages of the region compared to other global markets and what role is the Philippines playing today in the Asia-Pacific region?

I think, the Philippines is definitely growing and we believe that the company is well-positioned to be both a driver and a beneficiary of the country's infrastructure progress.  I´m not surprised that the GDP growth rate was higher than most of the economies in Asia. Still there is so much to do in our country and there are opportunities in terms of building more homes, transportation, and structures for agriculture. It is a very challenging thing for the Philippines that despite the downturn in the eurozone, we see growth in the Philippine infrastructure.The Philippine government is gearing towards more infrastructure projects and DMCI is preparing to take part in the construction and engineering of these initiatives.Since DMCI became public 17 years ago, we have evolved into an infrastructure company using our competencies in engineering and construction. For me, our direction towards business synergy has been realized.

Constructions and real estate have been significant drivers and indicators of economic health in the Philippines. In your opinion, which real estate and construction market segments are most likely to receive attention in 2012 and 2013?

We always make sure that we build homes with value – affordable and high-quality homes. Our residential development business targets the mid-income families and demand mostly come from the mid-market.  The population in the Philippines has grown over the past half century so the need for the rising demand for housing continues. It is our commitment to respond to the needs of our clients in providing decent homes and livable communities using our construction and engineering capabilities. We always put quality into every work that we do. I think that is the trademark of what we sell. The quality of the goods that we sell is always the primary selling point. We are happy to note that we are one of the real estate companies that have grown so fast because of the promise of quality and affordable housing that we offer.

After working as a Concrete Inspector, you founded DMC Consunji in 1954 and in 1995, you established DMCI Holdings. Who inspired you or give you the passion to make a life-changing decision to do construction work on your own?

I started as a concrete inspector and registered in 1951 as an individual contractor focusing on construction management works.  When we were growing, we were so heavily taxed that DMCI had to be registered as a corporation in 1954. We were already working three years ahead when it was incorporated as D.M. Consunji, Inc. Engineers and Contractors.  It was really in 1951 that I started in this business and in 1954 as a corporation.

I came from a family of farmers. I was living with my aunt, the sister of my mother. I told her that I planned to start up my own company and would not work as a regular employee. I had a long chat with her. She said that the work contractors did during our time was not really good and some were unethical.  I had to prove myself.  I promised my aunt that I would not do anything to damage our family’s name. I promised her that I would work with honesty and integrity in doing my own business.

Integrity is very important in business. It is embedded in the DMCI Creed which we believe in. If you do not believe in what you are doing, then forget it.  Business goes beyond earning money. We always start with true service. That is what we stand for.

You have demonstrated your capability to be not only in construction, real state and coal which are you core businesses. You have entered other sectors such as water utility, power, nickel and toll roads. Can you highlight some of your new major projects?

I told my children that you cannot dabble in the same business. You have to do something else.  I told them you can study business or other courses but your growth will be very limited in this area.  Because of this we have ventured into other sectors. We have good people.  They are known to make “landmarks” here in the Philippines. If you have very good people, how do you make use of them? We let them study and learn the best from other cultures. All the known contractors in Europe went up and came down. Nobody stayed on top. We then decided to be a public company in 1995. Whatever we have will be shared. But our greatest asset is not money. Our greatest asset is our group of people. With this group of people that we have, we were able to grow the business.

The Administration of President Benigno Aquino III has pledged major investment in infrastructure to unleash the potential in tourism, agriculture and industry, address housing needs and increase direct jobs in the sector. Projects will be delivered through PPP´s. How do you see these public and private partnerships? With your experience in the sector do you believe they will boost and encourage the modernization process?

That is a very interesting question.  I guess the PPP projects will boost the Philippine infrastructure. We are more interested in being part of the construction of these projects. We are challenged to do construction beyond the ordinary.  We are now focused on the unique perspective of the construction business.  It is a continuous learning of the business.  We learn from the experts and study their technology.

You stated in one interview that “one must love his work and be proud of it, and this, combined with hard work, will allow people to achieve skills and work quality”. Some people tend to have higher profit margins at the expense of quality which is not good.  As the father of the construction in the Philippines, in your opinion what regulatory measures are being taken or should be taken to ensure quality property development?

You know I don’t think regulatory measures can take care of it. It is the person. The person must impose upon himself at certain levels to focus on quality rather than prices. At certain times, we have to say no. We have to do quality here. Like in our real estate business, we provide quality homes to families who want decent and affordable houses to call their own.  We put quality in all our projects.  That is the most important thing to us.  With repeat clients, we can say that we provide high-quality projects.  We find ways to shorten and lighten construction works without sacrificing the quality. This resulted in bigger savings for the clients. Our construction and engineering expertise are also servicing our other businesses such as the power generation and water utilities.

Talking about the profits, we know that DMCI's coal mining business improved operations with net income of around P4.1 billion for coal mining and P1.9 billion for power generation in 2011. Has it become a priority for you today? What new improvements can be done in these sectors?

Our coal mining business is doing very well which accounts for 40% of our net profit.  Our coal production is at seven million metric tons (MMT) a year, of which we supply 2 MMT of it to our own power plant.  Although the export demand is still robust, we prioritize servicing our local markets which commanded higher price.  We won in the bid for the 2x300 megawatt power plant in Calaca, Batangas. We only need to rehabilitate this plant.  We finished rehabilitating the first unit last year which now runs at 250-300MW.  While the other unit is now in its test-run stage which we just recently finished, the rehab in the second half of this year.   Now we can say that we are indeed in the power generation business.  Now we are not just putting up power plants, we run them.

There is a big challenge to bring American companies to some new markets and of course once they experience these new markets they will change their mind. As you stated: “if there is a problem there must be a solution”. Do you feel that the global investors’ community and especially the US community is fully aware of the potential here in the Philippines? What would be the solution?

I think the challenge to bring new investors into the country is always there.  There are lots of potentials here for foreign investors.  We have the PPP which in time will bring lots of investments.

How does DMCI communicate its message of expansion to all these US potential investors?

I think the challenge to bring new investors into the country is always there.  We have been attending a few investor conferences in the US, Europe and in Asia.  We are glad that we were invited into these conferences to showcase our businesses to foreign investors.  Well, competition is always good because it makes you a better company.  It is a good chance for us to show the investors our transformation into a complete infrastructure conglomerate through synergizing businesses.   We received a lot of meeting requests from both existing and potential investors.  They find time to visit us here and we welcome them.  We talk to them and tell them our stories.

Many people consider you the father of the construction that continues to be inspired. An icon, a contemporary hero.  engineer by profession, a businessman, one-time secretary of Public Works, Transportation and Telecommunications, the builder among builders. Through all these years you give to the Philippine construction business a whole new meaning, transforming the industry from being just an occupation or a livelihood to a passion, a calling. With your experience and knowledge, what are the main challenges that DMCI Holdings Inc is facing today and tell us what keeps you inspired?

I still go for the personal integrity of the people working for us that is why we still have it in the creed.  Construction is a noble profession. I believe that nobility comes from the inside. It still takes me some time to talk to our engineers. In construction, your participation makes the work simple or complicated. If you participate well, everything will be simple but if you participate half-heartedly, forget it. We love challenges as we grow our business in a more strategic direction.  Our projects are becoming more complicated but we are glad that we can deliver them very well.  It is our people who are guided by our creed that makes us successful.  It tells them to deliver excellence in every project we do.

It’s hard to believe, but you were a P700 month employee of Jose P. Marcelo. As a young engineer, you started a company that bears your initials – DMCI – which has grown into a huge enterprise and today you are among the top five richest people in the Philippines according to Forbes.  What advice would you give to all those young people who want to start a business venture and why US investors should come and invest today in one of the most promising countries in the Asia Pacific region?

I believe in personal integrity. You should know the business by heart.  Construction business is not only an occupation, it is a calling.  Construction is a task with a huge social value, ethics and obligation to clients.

We welcome investors. If you go around and ask people who bought DMCI shares, all these people from the stock markets would say foreigners. I think the investors have started to appreciate that DMCI is a long-term investment. 

I will give you a good example. We were awarded the Skyway project, a first elevated road project that was given to a Filipino company.  We were able to finish it ahead of schedule. The government was happy. When everything was finished, we received invitations from small groups of subdivision for dinner and informed us that they are also very happy. The value of their land or real estate has gone up by 15% because of the development of fast transportation. 

To conclude, our achievements are not measured on how many structures we have built, but by how many lives we have touched.  Beyond every structure that we built, there is a compelling social value instilled by the hard work of our men in DMCI.