Tale of Two Brothers: Robert Hernandez, WG’68, and William Hernandez, W’70

Bob Hernandez graduated from the University of Pittsburgh, earned his MBA from Wharton and in 1968 joined what was then U.S. Steel. His brother Bill earned his undergraduate degree from Wharton and his MBA from Harvard, and worked for Borg-Warner and Ford Motor Co. before joining PPG Industries in 1990.

Today, they hold almost identical jobs: Bob, who is four years older than Bill, is vice chairman and CFO of $23 billion USX Corp. in Pittsburgh. Bill is senior vice president and CFO of $7.5 billion PPG, a few city blocks away.

“It’s hard when we have family get-togethers not to sit there and talk business,” says Bob.

Bob (left) and Bill (right)

Their route up the same corporate ladder wasn’t all coincidence. Bill initially planned to go to engineering school until his older brother showed him an economics textbook. “It turned out I loved microeconomics,” says Bill. “It was a way of applying math that made sense of the world.” He was accepted at Wharton where his first two undergraduate years coincided with Bob’s two years in the MBA program.

At USX, Pittsburgh’s largest industrial enterprise, two thirds of the company’s revenues now come from the energy side through its Marathon Group, and one-third from steel production through U.S. Steel. Huge changes in the auto industry alone have required USX to make a lighter, more corrosion-resistant product to meet clients’ needs, says Hernandez. “I own a Jeep Grand Cherokee and much of that steel is ours. Everything but the roof is galvanized.” USX is also the largest domestic producer of tubular steel used primarily in energy applications.

With more automotive producers going abroad, the company recently announced a joint venture in Slovakia with VSZ, the country’s largest steel producer, and is looking at other international deals as well. Marathon already has an established international presence. One of its latest projects is a venture in Russia to develop a large off-coast oil field. “There will be a number of follow-up projects if this works out,” says Hernandez.

“Our biggest challenge right now,” he adds, “is to regear our thinking to a strong growth mode after years of trying to improve our balance sheet.”

Over at PPG, international expansion is also a priority. “The business has become much more global over the last five years,” says Bill Hernandez. While the company has always been heavily involved in Europe and somewhat involved in Asia, “we are looking at a lot more projects in Latin America.” Today almost half of PPG’s business is coatings. The second largest component is glass and fiberglass. Commodity and specialty chemicals make up the remaining 20-25 percent.

PPG “has had record earnings per share every year for the last several,” says Bill Hernandez, and the “challenge is to continually ratchet up that performance. We are known as a strong, well-managed company. But we can’t afford to get complacent.”

The Hernandezes obviously don’t share proprietary information (or own stock in each other’s company) but they do have lunch several times a year with other CFOs to trade ideas. The group meets in the Duquesne Club where the Hernandez’ father for many years was a chef.

The two brothers also run marathons together, occasionally vacation together and a few years ago worked together, along with others, to refinance the Pittsburgh Pirates.

Is there a sense of competition between the two? Bill says no, pointing to differences in their backgrounds. Bill worked for several companies before joining PPG, while Bob has stayed with one company since graduation. Also, “Bob primarily came up through the treasury and operations route, while I came up more through the controller and general management route,” Bill adds.

Bob concurs. No real competition between the two. But, he adds, “When you talk to Bill, tell him I’ve already explained to you that while he may be the younger brother, he is also the much older looking one.”

“If I look older,” responds Bill, “it’s due to having three daughters. But I’m still better-looking.”

Siobhan Mullen, WG’88: Space-Age Entrepreneur

After reviewing Siobhan Mullen’s career path, it’s not all that surprising to find her president of an aerospace company, one of whose projects includes construction of a space port for international launch vehicles and their payloads.

She earned degrees in physics and optical engineering from the University of Rochester in 1983, joined the space and communications group at Hughes Aircraft where for two years she supervised satellite construction and testing, and then spent a year at TRW working on the company’s free electron laser system. In 1988 she received her MBA/MA from the Joseph H. Lauder Institute of Management and International Studies at Wharton, trekked for several months throughout Asia, and subsequently joined Honeywell Europe in Brussels to conduct a worldwide space study tied to Honeywell’s ambitions to position itself globally in the space industry.

“My job with the space study involved finding out where money was being spent, where R&D was going, what strategic directions companies were going in, etc.,” says Mullen. “In doing that, it became obvious that miniaturization was happening and that satellites could be smaller yet have a wide range of capabilities. I could also see that the demand for information was growing rapidly worldwide, 24 hours a day, which in turn gave birth to a new industry in the late ‘80s, early ‘90s, of constellations, or large networks of small satellites, all working together in one giant network that covered the earth.”

In 1992 Mullen founded Akjuit Aerospace, Inc., named after an Inuit word referring to a winter constellation that is also a symbol of inspiration and hope. She and a management team have already raised close to $22 million of the $100 million needed to fund the company’s first major initiative, SpacePort Canada.

SpacePort Canada, already under construction on the Hudson Bay in Churchill, Manitoba, is intended to serve as a privately owned, privately operated airport for orbital and sub-orbital launches, with the first launches slated for the year 2000. “Other launch sites in the world are currently government-owned and operated and launch only their own countries’ vehicles,” says Mullen. “This is our most visible project because it’s more capital intensive than the others. Also, people are aware of what a launch site is because they have seen shots of Cape Canaveral on TV.”

Customers expected to launch from SpacePort are companies involved in data communications, multimedia communications and voice communications worldwide. “These kinds of satellites require higher inclination orbits closer to the poles, as opposed to the big TV satellites that now orbit around the equator,” says Mullen.

In addition, Akjuit will provide on-orbit support for existing and proposed satellites with SpacePort’s ground station architecture, and will use those same satellites and architecture to capture data to create a geotechnical database, among other projects.

Although only 30 full-time employees work directly and indirectly for Akjuit, the company is closely allied with a technical team of 21 separate companies led by Raytheon, whose role is to develop, construct and establish operating procedures for SpacePort Canada. “These companies provide funding, technology know-how and most important, tremendous credibility,” says Mullen. “They have a vested interest in making sure this project survives.”

Akjuit’s headquarters are in Winnipeg and a U.S. office was recently opened in Colorado Springs. Mullen lives in Toronto, but spends more than half her time in an airplane.

She grew up in New Hampshire and Pennsylvania, and attended junior and senior high school in Wellsboro, Pa., a small town in the north central part of the state. “I have always been interested in science and space,” says Mullen, whose father was a theoretical physicist. “It was a shock to me to finally realize that not every child grows up looking at the moon and the rings of Saturn through a telescope.”

She has a pilot’s license (which she hasn’t had time to renew), was trained as a classical pianist, and loves trekking and mountain climbing. Her partner, whom she met while climbing in India, runs Canadian Himalayan expeditions.

“In life, it’s a gift to be able to work with one or two other people who have vision and the drive to turn an idea into reality,” Mullen says. “To be involved in a project where there is an entire team of those kinds of individuals — from the technical people to the office staff — is absolutely exhilarating …

“We have an opportunity to lead the launch service industry of the next generation. Canada, because of its international acceptance, is the perfect location to accomplish this.”

Raul Henriquez, WG’84: Teaming Up With Latin America

Shortly after Raul Henriquez graduated from Wharton, he and his cousin started a commodities company whose prime asset was an in-depth knowledge of the coffee market. “We developed expertise in coffee futures which to this day has secured us a very comfortable position in that industry,” says Henriquez. “We continue to have one of the most important futures desks in coffee in the world. Our success there led to the desire to branch out into emerging capital markets and general securities.”

Today, Miami-based Hencorp Becstone & Co. is a broker/dealer catering to Latin American institutions that want to access the world capital markets. “We feel we are in an excellent position to service our clients’ needs because we have developed a very good trading and brokerage capability and are fully bilingual. We treat Latin American institutions the way they like to be treated,” notes Henriquez. “We try to make our operation almost an extension of their own … We want our clients to feel like we are a part of their team.”

Those clients, who include midsized and large institutions, “are interested in everything from hedging their portfolios through the futures market to investing in emerging markets,” says Henriquez. Recently, to enhance their capabilities in the emerging markets, Hencorp Becstone entered into joint ventures with Refco, one of the major futures brokerages in the world. “Since 1995, we have been doing business as Refco Emerging Markets, which our group manages out of Miami,” says Henriquez.

Net revenues for Refco Emerging Markets and Hencorp Becstone were more than $35 million last year, and trading volume exceeded $20 billion.

Henriquez was born in El Salvador where his family has long held interests in real estate, banking and construction, not only in Salvador but also in the U.S. The family moved to Miami in the late ‘70s, and Henriquez attended Georgia Tech and the University of Florida before going to Wharton.

Hencorp Becstone has done so well that Henriquez and his cousin operate independently of the family business although they continue to serve as informal advisers.

Despite spending the majority of his time in Miami, where he lives with his wife and three children, Henriquez has not lost enthusiasm for his birthplace. “El Salvador has a promising future as an industrial country,” he notes. “The government has instituted a strict monetary policy, inflation is under control and there is a stable currency.”

Henriquez and others had anticipated an increase in investment and savings rates in El Salvador as a result of pension reforms expected in 1997. “These reforms have been delayed, much to my chagrin,” Henriquez says. “It’s what happens when political considerations prevail over economic ones … The entire privatization initiative, including privatization of the telecommunications industry, has been set back, but I do believe that progress in all these areas will be made this year. The electrical utilities were privatized in January and we expect the national telecommunications company to be privatized in the coming months. Certainly the country, which has obtained an investment grade from major credit rating companies, is set to see an increased inflow of capital investment from abroad.”