Old railway system creates bus empires -1

MANY of the country's billionaires outside Metro

Manila are land transport barons who grew rich by

efficiently servicing millions of commuters, such as

the media shy and 49-year-old "Land Transport

King" Johnny Trinidad Hernandez.

He controls undisputed industry leader Victory

Liner Inc. (700 buses), Five-Star Bus Co. (250

buses) and Victory Shuttle Services Inc. (150

buses).

Due to the politicians' failure to modernize the

country's antiquated railway system, provincial

entrepreneurs in the private sector built some of

Asean's biggest and richest bus companies.

How do they manage the operations of their huge

bus fleets?

Innovation and reliable service

Jose Hernandez Sr., and a humble Bulakeño

mechanic who never finished college started

Victory Liner. He built Victory Liner into a giant

with his innovative ideas and his buses' consistent

efficient service.

He was born in Macabebe, Pampanga, inside a

hacienda owned by the Hispanic Zobel-Ayala clan,

where his father was a Spanish mestizo

bookkeeper (with the title "Tinidor de Libro").

The company name was derived from the postwar

phrase "Victory Joe," celebrating US triumph over

Japanese militarism in Asia and "Joe" was the

founder's Americanized nickname.

The elder Hernandez launched Victory Liner in 1945

by accident and without capital. Joe originally

designed a small truck for transporting his buy-sell

commodities. He used bits and pieces of

abandoned US military vehicle machinery, metals

and spare parts, but he was surprised when his

truck design was built and assembled into a

"jardinera" bus by the Chinese Po Chuan.

At first Hernandez was reluctant to accept the

bus, but he later decided to plunge into the

transport business after Po Chuan allowed him to

repay the P6,000 capital on installment basis from

future proceeds of his "pasada."

The first bus route was Manila-Olongapo-Manila,

the first terminal was in Manila's busy Divisoria

area, the first treasurer was his wife Marta

Trinidad, and he was one of the first drivers along

with an in-law, and he also worked as the

mechanic.

A few years later, Joe hired his brother-in-law--the

late Eugenio Trinidad--as helper-conductor, and

this brilliant man later became a wealthy bus

tycoon himself. The business was only

incorporated in 1953. Up to this day, the

89-year-old founder is still active in the research

and development division of the country's biggest

land transport group.

A secret to the founder's success was his

innovative ideas--pioneering the conversion of

front-engine to rear-engine buses, and the use of

steel-bodied buses. In the late 1960s, Joe used

diesel engines for his fast-growing bus fleet. He

also pioneered the use of air-conditioned provincial

bus service and bus chartering service.

In the 1980s, his son and heir Johnny Hernandez

became the first to use automatic transmission as

well as videos and televisions.

Participatory management

What is his management style? Johnny Hernandez

says: "I prefer participatory management. My

managers are given powers and I delegate

authority. Our executive committee meets every

week."

A business economics graduate of UP, his biggest

challenges are how to manage employees and how

to mobilize capital, since he describes the business

as "labor-intensive and capital-intensive."

Hernandez says: "My father said we should not go

into businesses that we do not know, where we

have no expertise. We should focus on our

business, concentrate and do our best. Look at

various bus operators who failed, because they

went into piggery business, trading and subdivision

projects."

His father Joe had gone into related ventures, such

as a brakelining factory, a tire re-threading plant

and a bus body-building plant.

Johnny Hernandez says another major reason

behind Victory Liner's success is its talented and

loyal 2,300 employees. Hernandez says: "One

reason Victory Liner has done well is our

well-managed industrial relations with labor. The

last time we were hit by a strike was in 1954. We

have a strong union, but instead of fighting with

them, we have decided that working with the

union is better for all."

"We have institutionalized a strong grievance

system in Victory Liner, with weekly meetings

between labor and management to thresh out

potential problems. I believe that lines of

communications should be open. In my companies,

even a janitor can enter my office and talk with

the boss," he says.