Growing Through Crisis in 2020
Jaime Augusto & Fernando Zobel de Ayala
Surviving Crisis – Reflecting on our priorities
1. Protecting our Employees
2. Ensuring Business Continuity
3. Supporting our Clients and Partners
4. Providing for the Communities Around Us
Growing through Crisis – A transition to our new normal
1. The Potential of Digital Infrastructure
2. Re-imagining the Workplace
3. Thinking Creatively to Build Anew
To our community,
We write to you on the fourth month of what has been a long and difficult 2020 for us all – from the eruption of the Taal volcano in January, to the painful disruption of COVID-19. We hope you and your families are well, healthy, and safe. The challenges and suffering that have been brought upon our everyday lives have become unquantifiable.
At Ayala, we have learned to adjust to a new reality. We have reflected on its implications and looked at building on this moment of adversity to continue validating our reason for being – as a progressive contributor to the growth of our society and economy.
Now that we are preparing for a transition to our “new normal,” – a post-enhanced community quarantine – we hope you will join us in shifting to a proactive and solutions-oriented approach to the challenges we now face. At Ayala, we see these past few months as more than a 2020 crisis. Instead, we view it as an important transition for the company in its support of customers, partners, and the community at large.
We would like to acknowledge the ways in which our group has worked together to survive this crisis. As a group, we are proud to have contributed over PHP5.5B – through employee support, business operations waivers, and monetary and in-kind donations – as a response to the COVID-19 crisis in the Philippines.
We feel it is equally important to recognize the ways in which we have grown through this crisis. The ability to adjust in progressive and sustainable ways is key to long-term survival and relevance – and we are proud of our ability to have done this at key moments in our country’s economic history.
SURVIVING CRISIS – Reflecting on our priorities
From the start of this difficult period, we prioritized 1) protecting our employees, both financially and health-wise, 2) ensuring business continuity, 3) supporting our clients and partners, and 4) providing for the communities around us. This is a crisis that is unprecedented in scope and scale and our response must be reflective of this reality.
1. PROTECTING OUR EMPLOYEES
At the onset of both the Taal and COVID-19 crises, our priority, as a group, was to protect the Ayala employee community. To be able to respond to the crisis accordingly, we needed our team to feel that their health and welfare, and that of their families, were protected. Our various business units worked together to guarantee the protection of the physical health, financial security, and productivity of our employees as much as possible during this difficult period.
• We prioritized protecting our collective health:
o Our business unit continuity programs were activated quickly according to the needs of each business unit – ensuring that we could still serve our customers effectively while protecting the health of our employees. This involved developing a skeletal workforce plan where out of our 56,500+ permanent employees, the majority began a structured work from home process, while the balance reported onsite to cover critical and essential positions.
o Our AC Health team were mobilized to provide advice and a framework for effective and appropriate health protocols for our use groupwide. This supported our employees and their dependents in identifying and managing symptoms and formulating appropriate action plans. In addition to a dedicated hotline with access to doctors for Ayala Group employees and their dependents, our group is working on developing a COVID-19 facility to address the needs of our community.
• We looked to provide financial security:
o Days after the Enhanced Community Quarantine was announced, the Ayala Group allocated PHP2.4B towards an emergency package of varied financial assistance to both employees and to those who provide contractual services to our group. This assistance has and will cover a mix of wages, leave conversions, and loan deferments.
• We worked to manage our productivity:
o A major positive externality of these events is that they have added momentum to our digital transformation as an organization. Our HR and ICT leads, as well as our employees, have helped us navigate this to ensure success and business continuity in this new context.
o We have looked to soften the transition through online resources, providing opportunities to re-tool or enhance existing skillsets. We have also worked to engage our employees in this new set-up, through virtual townhalls and group fitness courses, among other initiatives.
Our ability to operate during such difficult times is thanks to our incredibly committed front-liners who continue to hold down the fort for us – maraming salamat sa inyong lahat. Their deep commitment to service – the willingness to risk their lives and leave their families – has enabled us to continue to deliver for our clients. We draw our strength from them.
In all of this, we are reminded of both the resilience and humanity of our employees. They, in turn, reminded us to be true to our most important values while contributing to making the best out of a difficult situation. Our employees have allocated over PHP164M, group-wide, of their own personal donations towards the fight against COVID-19.
2. ENSURING BUSINESS CONTINUITY
While the outlook for the business environment has certainly been negatively affected by these unfortunate events, we take comfort in having maintained a high level of fiscal prudence and a healthy balance sheet to enable us to absorb external shocks. A major benefit of being a multi-business group is our ability to lean on each other, learn from each other, and leverage on each other’s strengths as we navigate this difficult period.
• We continued to deliver essential services, which included the following:
o BPI: As critical infrastructure, BPI continued to operate during the crisis to provide clients with the banking services they need with approximately one-third of BPI and the vast majority of BanKo branches remaining open, in addition to giving full access to our digital channels.
o Globe Telecom: With connectivity more important than ever, the Globe team has worked overtime to ensure the consistent delivery of service across its broadband and mobile channels.
o Manila Water: The group has delivered 24/7 water availability for its service areas while maintaining system losses at a very low average of 12%.
o Ayala Land: The company has continued delivering products and services where possible, given recent government mandates that have restricted many of our business lines.
BPOs (which comprise 75% of Ayala Land’s office tenant portfolio) continue to operate, also contributing to the 50-60% occupancy across Ayala Land hotels.
Shopping centers remain open to deliver on essentials (groceries, drugstores, banks, and money changers) across the country.
AirSwift has continued operations where possible and assisted the exit of 3,500 foreign tourists (in partnership with the Department of Tourism), as well as in other accredited essential flights.
o AC Health: With the largest network of outpatient clinics, AC Health continues to serve as a triage point for suspected COVID-19 cases, as well as in providing extended frontline care to keep non-COVID patients safe outside the hospitals. Generika drugstores continue to be operational nationwide, serving the needs for medical supplies and treatment. In addition, AC Health is planning and executing on COVID-specific testing and treatment facilities.
o AC Energy: Plants continue to be operational, with no impact on the ability for either the Philippine or Vietnam operations to deliver on critical power infrastructure.
o IMI: Plant operations are close to full capacity globally (including our five plants in China), except for the Philippine and Mexico plants, which are following local government mandates of localized quarantine.
• We prioritized financial liquidity:
o From a financial point of view, we have entered this period of crisis with a strong cash position, and with substantial committed and uncommitted credit lines.
o Ayala Corporation, as the parent investment company, remains ready to support its business units as needed.
• We are facilitating a safe, post-quarantine re-entry of our workforce:
o As we evolve into a post-quarantine reality, our business units have ensured that we are well prepared to re-engage safely and effectively in this new environment. We have invested in testing protocols (including PCR machines and rapid-testing kits), aligned ourselves formally with accredited hospitals, clinics, and research institutions. Our Group HR Council and AC Health team, together with the AC Analytics team, have worked to prepare operational readiness frameworks to ensure that we can move our teams to effectively address customer needs while maintaining the safety and health standards ofthe organization.
3. SUPPORTING OUR CLIENTS AND PARTNERS
The Ayala group would not be what it is today without the engagement of the many stakeholders that contribute to the fabric of our economic well-being. We do not work in isolation. We felt it was important, right up-front, to support the very ecosystem that makes us successful. This community includes more than 200,000 small and medium enterprises and approximately 1,000,000 micro-enterprises. Each of our business units have found ways to alleviate the many pain points that our partners and customers face today, with some examples including:
• Ayala Malls have, so far, shouldered PHP1.4B in one month’s worth of rent to support non-operating tenants.
• BPI extended a 90-day grace period for all personal and retail loans of front-liners, in addition to the 30-day grace period across all loans.
• Globe Telecom extended a 60-day grace period for bill payments, while Manila Water extended the same for 30-days.
• AC Health organized itself to keep 51 Family DOC primary clinics, 6 Healthway specialty clinics, and 720 Generika drugstores open nationwide to continue providing health care services for the many communities they serve. With over 1,500 medical professionals deployed daily, the AC Health group remained important front-line health workers during this crisis.
4. PROVIDING FOR THE COMMUNITIES AROUND US
This crisis has touched and affected us all in unprecedented ways and requires a response that is communal in nature. Working with both government and private sector partners, we have looked to efficiently and meaningfully support the communities around us during this challenging period.
Our group, through the Philippine Disaster Resilience Foundation, convened over 30 private sector leaders to raise PHP1.7B for Project Ugnayan, with the goal of providing food for over 1.5 million of the most economically vulnerable families in Greater Metro Manila (roughly 7.5 million individuals). We partnered with Caritas Manila, ABS-CBN Foundation, Jollibee FoodAID, and The Asian Development Bank, to distribute both grocery vouchers and goods in-kind.
In partnership with the public sector, our group of companies initiated a number of supportive projects, which included:
The conversion of the World Trade Center into a 502-bed facility for COVID-19-related cases, which was completed in seven days (in partnership with DPWH, Ayala Land, Makati Development Corporation, AC Energy, Manila Water, IMI, Globe, and AC Health).
Ayala Land and BPI worked with the Philippine Red Cross to build a COVID-19 testing center in Mandaluyong, with a capacity of 3,000 tests per day.
The PHP160M conversion of our QualiMed facility in Nuvali, Santa Rosa, Laguna into a response center, complete with appropriate testing and critical care facilities, including mechanical ventilators.
Globe continues to provide free internet connection for 68 hospitals, 110 supermarkets, 21 LGUs, 3 airport terminals, 4 quarantine centers, and free calls to government hotlines. In addition, Globe is coordinating with University of the Philippines scientists to assist with the study of the spread of COVID-19.
Across the group we have contributed in-kind donations including N-95 masks, alcohol, PPE, ultrasound machines, ventilators, and mobile x-rays to the DOH and various hospitals around the country.
GROWING THROUGH CRISIS – A transition to our new normal
There is no doubt in our minds that this moment in history will mark a transition to what we are considering a “new normal.” During this period of crisis, we have had the opportunity to learn a great deal about ourselves. We hope to respond to these circumstances with a renewed sense of urgency and imagination. More specifically, we are 1) reminded of the potential of digital infrastructure, 2) pushing a re-thinking of the workplace, and 3) harnessing the importance of thinking creatively.
1) We are reminded of the potential of digital infrastructure – and have witnessed our investments in digital transformation paying forward. The digital platforms of both BPI and GCash enabled individuals to make critical transactions – sending money to family far-away and making purchases and bill payments – from the safety of their homes. Similarly, KonsultaMD, Aide, and MedGrocer, have allowed individuals to receive medical care and services remotely. There are many such examples across the group – we have witnessed the adoption and growth of these platforms at unprecedented rates. AC Education, among others, immediately adapted their model to cater to this new context.
2) We’ve re-imagined what the workplace looks like. We’ve considered how flexible work environments could potentially increase productivity, contributing to a decrease in hours commuted, and the ways in which this could enhance the lives of our employees.
3) We are thinking about how best to build anew through the crisis – and reminded of the value of thinking creatively to adapt. Our business units are devoting a significant amount of time to building out a revised playbook – considering what aspects of our previous business model may be at risk, and the ways in which we can take advantage of opportunities that have arisen. We hope to build out new and unique ways to serve our employees, customers, and communities, amidst the context of our “new normal.”
In conclusion, we are learning through this crisis and adjusting to new realities. We are grateful for the tremendous efforts of our Ayala Board of Directors, our Ayala Group CEOs, our many senior advisors, and all our colleagues within the group. Although we shift to a “new normal,” we remain rooted in the same values that have driven us over the past 186 years, with an emphasis on remaining agile, creative, and connected to our broader communities.
We view ourselves as one component of many efforts – both singly and collectively. The potential of creating a sustainable future for our country relies on the ability to leverage our interconnected society towards shared growth. Our strength as a community comes from our ability to grow with each other.
We wish you continued strength of health and spirit during these difficult times.
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