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"For 2015, Hero Norway expects revenue of $63 million, with profits of 3.5 percent. " Title correction: Long-time hospitality business entrepreneurs expand bus

"For 2015, Hero Norway expects revenue of $63 million, with profits of 3.5 percent. " Title correction: Long-time hospitality business entrepreneurs expand business into providing refugee housing and services. The business made 2.2 Million profits in 2015 operating highly efficient refugee care centers. My guess is there would be at least that much money wasted if these centers were run by less experienced people in that business sector (e.g. the gov't). Also note: the government regulates the business. Overall from the article, it seems like a good way to care for the refugees.

codyb 11y ago
Yea the headline has more than a tad bit of click bait to it. It sounds like they're raking in money hand over fist but profits of 3.5% seem entirely reasonable for the work they're doing (and pretty low as for profit industries go).
rmxt 11y ago
Without access to their books, it's hard to evaluate their actual profit. But, later in the article there is this quote: "The Adolfsens claim that theirs is 3.5 percent, but Herning calls that figure “highly unlikely. All the other refugee companies that I’ve looked at have a much higher profit margin.” She says that in handling revenue from nursery schools and nursing homes, the Adolfsens have played a shell game, shifting profits from one business within their conglomerate to another. “I wouldn’t be surprised if they were doing that for Hero as well,” she says." Also, quick searches seem to indicate that for-profit prisons (in the US at least), an analogous industry, have profit margins significantly north of 3.5%. [1] I wouldn't be surprised if the actual profit margins for the refugee care companies, when all subsidiaries are included, are between 5-10%. I don't know if there's a perfect solution to refugee care that optimizes spending and societal harmony, but private enterprises running the show with close government oversight (and no shell games), seems like a somewhat happy middle ground. [1] http://www.cnbc.com/id/48675641 http://www.cnbc.com/id/48675641
- theodorton 11y ago
  Their revenue and profit prior to taxes for 2014 was 549M and 27M. Corporate Tax for 2014 was 28 % so 19.4M profit after tax which gives a 3.5 % net profit. http://www.proff.no/selskap/hero-norge-as/stavanger/tolker-flere-språk/Z0IIRBZ5/ http://www.proff.no/selskap/hero-norge-as/stavanger/tolker-f...
  - vidarh 11y ago
    The point made in the article (and the comment about) is that they have a history of playing a shell game with their companies to obscure where they're actually making their money (and possible to maximize tax benefits). Without seeing their actual accounts, those numbers are meaningless as you don't know whether or not they've bought all kinds of overpriced services intended to shift revenue somewhere else, for example.
- rayiner 11y ago
  Who cares if the profit margin is even double that (10-20%). Almost certainly still cheaper than the government getting into the hospitality business, and has the benefit of not creating a permanent bureaucracy.
  - rmxt 11y ago
    I am not particularly concerned with the "above-the-table" profit margin. I am concerned with the possibility that using private contractors is prone to abuse, a loss of accountability (shell games) and a race to the bottom for quality of service in a venture where human quality of life is (or should be) the primary goal. Sure, the prime contract might be locked-in to a small profit margin, but I find it hard to believe that the same owners don't have their hand in the pot somewhere lower down in the supply chain. Which would lead to them making more than the prime contract 3.5% profit margin might suggest. Then again, it's not like public-private partnerships (or project delivery methods in general) are brand new concepts. Governments have somehow managed to get roads and schools (infrastructure) built for a pretty long time. (Not without complaints of overruns and abuse: see any megaproject in the United States.) Though perhaps there is something to be said for the qualitative difference and value of human life that distinguishes a "race to the bottom" for building a road, compared to providing temporary shelter and food for actual human beings. I agree that it's good that a government saves itself from getting into a "non-core" business so to speak. But I think that without strict oversight from government, refugee support services could turn into yet another field where shady business practices are the norm.
seivan 11y ago
It's not the money waste. It's the power vacuum that opened up where people established themselves as the good and others as evil. Big money in being an "anti-racist". Anyone pointing out that you charge 1600 per hour while living/owning in the most exclusive (homogeneous) parts of Stockholm (Gamla Stan) is obviously a racist. Obviously none of this shit is related to any form of civil rights issue.
- golergka 11y ago
  I think you're being downvoted for being aggressive and having a political agenda, but you do have a good point. Of course, we want to spend money to help people in need — but what happens when the people we hire with this money start to charge us a premium for excessive, and completely unnecessary expensive care? $31 to $75 per person per night seems a little bit costly, yes. But at the same time, I'm can imagine that they can have actual need for that. May be they need to live near all the official organizations and embassies because they will spend a lot of time there? This would explain "exclusive parts of city", for example. May be not. But anyway, it's always better to be more open to opposite point of view and imagine arguments for it.
  - roel_v 11y ago
    "31 to $75 per person per night seems a little bit costly" Is it? Looks like it includes everything: food, housing, electricity/water, cleaning, admin of frequently changing guests, ... If they can really provide everything for people for $31/day, there are welfare systems that could switch to save money...
    - golergka 11y ago
      Oh, I must have missed it. Then it certainly looks reasonable. But still, I think you agree that we should be able to have a discussion about this without (1) being called "racist" and at the same time (2) being open to possibility that this money is really required.
    - Shivetya 11y ago
gotchange 11y ago
What about this part? "Just outside Oslo, a savvy entrepreneur named Ola Moe recently rented a vacant hospital for $10,000 a month, did minimal upgrades, and began charging the government $460,000 a month to house and feed 200 refugees." It looks to me that Ola is making a killing here.
- silverbax88 11y ago
  Sure, if you overlook the part that he is housing and feeding 200 refugees.
  - seivan 11y ago
    He isn't. The tax payers are.
    - silverbax88 11y ago
      Of course, the tax payers are showing up and feeding everyone and staffing the place. So it's free money, right? No work involved at all. Not like he's doing a ton of work and creating value, then charging for it...or anything.
    - cpwright 11y ago
      Until they aren't, at which point the building is still a liability even if it is empty.
  - TeMPOraL 11y ago
    It's also common to overlook that just because there is a house already bought, doesn't mean people can live in perpetually without someone having to spend money. Houses require constant maintenance. Floors won't clean themselves, plumbing won't fix itself when it breaks, etc. Even if people had alternative food and water sources, you can't house them in comfortable conditions without expending money on maintaining those conditions.
- alexc05 11y ago
  except that he's now also responsible for feeding n refugees at a food cost of y per day. (it looks like n in this case is 250) Include also the cost of x beds, water, toilet facilities, general staff, operating costs of kitchen facilities, cutlery, dishwashers. The profit on the difference between $10k and $460k is not $450k. $460k / 30 days in a month = $15k per day. $15k / 250 refugees & asylum seekers = $60 / refugee per day. (fed, watered, sheltered, & safe) From the article, the profit is likely 3.5% of $460k or roughly $16k/month.
BocceBaal 11y ago
Exactly. The government was going to spend money on refugee housing and services anyway. If the brothers can provide suitable accommodations cheaper than anyone else can they deserve the profits.
- johnchristopher 11y ago
  Except it's not cheaper for the government or the taxpayer.
  - kristofferR 11y ago
    It is vastly cheaper. When the influx was at its highest the government had to buy all rooms in hotels in order to house the refugees.
    - vidarh 11y ago
      It is cheaper for short time periods. As you yourself notes: It's cheaper when it competes with hotels. It is absolutely not cheaper than government run asylmottak (asylym centres/reception). As an option for short/medium term handling of overflow it is reasonable, as it makes no sense to build more permanent spaces if the refugee flow then quickly subsides. It also makes sense to pay private providers reasonable amounts above cost to shoulder the risk of changes in volume. But if the base level is expected to stay high for a long period of time, the government have demonstrated very clearly it can run these kind of centres cheaply.
  - nickez 11y ago
    At least in Sweden the company run homes are a lot cheaper than the municipality run ones...
    - reycharles 11y ago
      Interesting, this comment says the exact opposite. https://news.ycombinator.com/item?id=10851727 https://news.ycombinator.com/item?id=10851727

codyb 11y ago

Yea the headline has more than a tad bit of click bait to it. It sounds like they're raking in money hand over fist but profits of 3.5% seem entirely reasonable for the work they're doing (and pretty low as for profit industries go).

rmxt 11y ago

Without access to their books, it's hard to evaluate their actual profit. But, later in the article there is this quote: "The Adolfsens claim that theirs is 3.5 percent, but Herning calls that figure “highly unlikely. All the other refugee companies that I’ve looked at have a much higher profit margin.” She says that in handling revenue from nursery schools and nursing homes, the Adolfsens have played a shell game, shifting profits from one business within their conglomerate to another. “I wouldn’t be surprised if they were doing that for Hero as well,” she says." Also, quick searches seem to indicate that for-profit prisons (in the US at least), an analogous industry, have profit margins significantly north of 3.5%. [1] I wouldn't be surprised if the actual profit margins for the refugee care companies, when all subsidiaries are included, are between 5-10%. I don't know if there's a perfect solution to refugee care that optimizes spending and societal harmony, but private enterprises running the show with close government oversight (and no shell games), seems like a somewhat happy middle ground. [1] http://www.cnbc.com/id/48675641 http://www.cnbc.com/id/48675641

theodorton 11y ago
Their revenue and profit prior to taxes for 2014 was 549M and 27M. Corporate Tax for 2014 was 28 % so 19.4M profit after tax which gives a 3.5 % net profit. http://www.proff.no/selskap/hero-norge-as/stavanger/tolker-flere-språk/Z0IIRBZ5/ http://www.proff.no/selskap/hero-norge-as/stavanger/tolker-f...
- vidarh 11y ago
  The point made in the article (and the comment about) is that they have a history of playing a shell game with their companies to obscure where they're actually making their money (and possible to maximize tax benefits). Without seeing their actual accounts, those numbers are meaningless as you don't know whether or not they've bought all kinds of overpriced services intended to shift revenue somewhere else, for example.
rayiner 11y ago
Who cares if the profit margin is even double that (10-20%). Almost certainly still cheaper than the government getting into the hospitality business, and has the benefit of not creating a permanent bureaucracy.
- rmxt 11y ago
  I am not particularly concerned with the "above-the-table" profit margin. I am concerned with the possibility that using private contractors is prone to abuse, a loss of accountability (shell games) and a race to the bottom for quality of service in a venture where human quality of life is (or should be) the primary goal. Sure, the prime contract might be locked-in to a small profit margin, but I find it hard to believe that the same owners don't have their hand in the pot somewhere lower down in the supply chain. Which would lead to them making more than the prime contract 3.5% profit margin might suggest. Then again, it's not like public-private partnerships (or project delivery methods in general) are brand new concepts. Governments have somehow managed to get roads and schools (infrastructure) built for a pretty long time. (Not without complaints of overruns and abuse: see any megaproject in the United States.) Though perhaps there is something to be said for the qualitative difference and value of human life that distinguishes a "race to the bottom" for building a road, compared to providing temporary shelter and food for actual human beings. I agree that it's good that a government saves itself from getting into a "non-core" business so to speak. But I think that without strict oversight from government, refugee support services could turn into yet another field where shady business practices are the norm.

seivan 11y ago

It's not the money waste. It's the power vacuum that opened up where people established themselves as the good and others as evil. Big money in being an "anti-racist". Anyone pointing out that you charge 1600 per hour while living/owning in the most exclusive (homogeneous) parts of Stockholm (Gamla Stan) is obviously a racist. Obviously none of this shit is related to any form of civil rights issue.

golergka 11y ago
I think you're being downvoted for being aggressive and having a political agenda, but you do have a good point. Of course, we want to spend money to help people in need — but what happens when the people we hire with this money start to charge us a premium for excessive, and completely unnecessary expensive care? $31 to $75 per person per night seems a little bit costly, yes. But at the same time, I'm can imagine that they can have actual need for that. May be they need to live near all the official organizations and embassies because they will spend a lot of time there? This would explain "exclusive parts of city", for example. May be not. But anyway, it's always better to be more open to opposite point of view and imagine arguments for it.
- roel_v 11y ago
  "31 to $75 per person per night seems a little bit costly" Is it? Looks like it includes everything: food, housing, electricity/water, cleaning, admin of frequently changing guests, ... If they can really provide everything for people for $31/day, there are welfare systems that could switch to save money...
  - golergka 11y ago
    Oh, I must have missed it. Then it certainly looks reasonable. But still, I think you agree that we should be able to have a discussion about this without (1) being called "racist" and at the same time (2) being open to possibility that this money is really required.
  - Shivetya 11y ago

gotchange 11y ago

What about this part? "Just outside Oslo, a savvy entrepreneur named Ola Moe recently rented a vacant hospital for $10,000 a month, did minimal upgrades, and began charging the government $460,000 a month to house and feed 200 refugees." It looks to me that Ola is making a killing here.

silverbax88 11y ago
Sure, if you overlook the part that he is housing and feeding 200 refugees.
- seivan 11y ago
  He isn't. The tax payers are.
  - silverbax88 11y ago
    Of course, the tax payers are showing up and feeding everyone and staffing the place. So it's free money, right? No work involved at all. Not like he's doing a ton of work and creating value, then charging for it...or anything.
  - cpwright 11y ago
    Until they aren't, at which point the building is still a liability even if it is empty.
- TeMPOraL 11y ago
  It's also common to overlook that just because there is a house already bought, doesn't mean people can live in perpetually without someone having to spend money. Houses require constant maintenance. Floors won't clean themselves, plumbing won't fix itself when it breaks, etc. Even if people had alternative food and water sources, you can't house them in comfortable conditions without expending money on maintaining those conditions.
alexc05 11y ago
except that he's now also responsible for feeding n refugees at a food cost of y per day. (it looks like n in this case is 250) Include also the cost of x beds, water, toilet facilities, general staff, operating costs of kitchen facilities, cutlery, dishwashers. The profit on the difference between $10k and $460k is not $450k. $460k / 30 days in a month = $15k per day. $15k / 250 refugees & asylum seekers = $60 / refugee per day. (fed, watered, sheltered, & safe) From the article, the profit is likely 3.5% of $460k or roughly $16k/month.

BocceBaal 11y ago

Exactly. The government was going to spend money on refugee housing and services anyway. If the brothers can provide suitable accommodations cheaper than anyone else can they deserve the profits.

johnchristopher 11y ago
Except it's not cheaper for the government or the taxpayer.
- kristofferR 11y ago
  It is vastly cheaper. When the influx was at its highest the government had to buy all rooms in hotels in order to house the refugees.
  - vidarh 11y ago
    It is cheaper for short time periods. As you yourself notes: It's cheaper when it competes with hotels. It is absolutely not cheaper than government run asylmottak (asylym centres/reception). As an option for short/medium term handling of overflow it is reasonable, as it makes no sense to build more permanent spaces if the refugee flow then quickly subsides. It also makes sense to pay private providers reasonable amounts above cost to shoulder the risk of changes in volume. But if the base level is expected to stay high for a long period of time, the government have demonstrated very clearly it can run these kind of centres cheaply.
- nickez 11y ago
  At least in Sweden the company run homes are a lot cheaper than the municipality run ones...
  - reycharles 11y ago
    Interesting, this comment says the exact opposite. https://news.ycombinator.com/item?id=10851727 https://news.ycombinator.com/item?id=10851727