November 15, 2024

You are here: Home / Archives for overruns

Reuters Ends Plans for Ambitious Direct-to-Reader Service

September 18, 2013 by

Reuters, a venerable news organization with a network of 2,000 journalists across the globe, has worked largely as a news wire service, with its reports and photos appearing in other publications. Next was to be a platform to reach readers directly, but it has been plagued by missed deadlines and cost overruns.

In an e-mail to employees that went out this morning and appeared soon after on The New York Observer’s Web site, the chief executive of Reuters, Andrew Rashbass, said the causes of the decision were cost overruns and the failure to reach international consumers.

“The project as a whole has struggled to meet delivery deadlines and stay within its budget,” he wrote. “Also, it does not capitalize on our strengths.”

Mr. Rashbass, who was hired in May from the Economist Group, added: “Next is a long way from achieving either commercial viability or strategic success. In fact, I believe the existing suite of Reuters.com sites is a better starting point for where we need to go. Therefore I have decided to cancel the Next project and put our efforts into enhancing and improving the existing Reuters.com sites. We will repurpose as much of the Next development work as we can for that.”

The e-mail said that several executives at the company had decided to leave as a result of the decision, including Jim Roberts, executive editor of Reuters Digital, who was hired at the beginning of the year after taking a buyout from The New York Times. Mr. Roberts was not immediately reachable for comment, though he posted to Twitter: “Yes, I’ll be leaving@Reuters, though not right away. I’m not leaving news. Stay tuned.”

In looking toward the future, Mr. Rashbass said: “We need to make our core strength of international news relevant to local audiences — which means, among other things, having local-language sites.”

Joshua Benton, director of the Nieman Journalism Lab at Harvard, said he was surprised by Reuters’s decision because the preview version of Next had been generating such interest. “There were a lot of really exciting ideas in Reuters’s Next,” he said. “What we saw in the preview was very forward-looking in terms of both content and technology. It generated a fair amount of excitement as a news organization doing something that looked digitally savvy.”

Article source: http://www.nytimes.com/2013/09/19/business/media/reuters-ends-plans-for-ambitious-direct-to-reader-service.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

Record Loss for Embattled ThyssenKrupp

December 11, 2012 by Leave a Comment

FRANKFURT — The German steelmaker ThyssenKrupp, battered by slow economic growth and a series of corruption scandals, reported the biggest loss in its history and confirmed that three top executives would leave the company.

The loss of €5 billion, or $6.5 billion, for the fiscal year that ended in September, was announced late Monday, capping a tumultuous year for a company that once symbolized German industrial might. The period was marked by the revelation of huge losses at the unit that operates steel plants in Brazil and Alabama, fines related to a price-fixing scandal, and other setbacks.

Last year the company lost €1.8 billion.

“I’m not going to talk anything up here, because it is obvious that a great deal has gone wrong in the past,” Heinrich Hiesinger, the chief executive of ThyssenKrupp, said at a news conference at company headquarters in Essen, Germany, on Tuesday.

ThyssenKrupp blamed €3.6 billion of the loss on its Steel Americas unit, which Mr. Hiesinger referred to as a “disaster.” He conceded that managers had valued plants in Rio de Janeiro and Calvert, Alabama, at far above their market value. Accounting rules required the company to record a loss after recognizing the factories’ actual worth.

The Brazil factory suffered from cost overruns during construction, and both mills were hit by slack demand, ThyssenKrupp said.

The fiscal-year loss means that ThyssenKrupp will not pay a shareholder dividend for the first time since it was created by a historic merger in 1999. Still, ThyssenKrupp shares rose about 1 percent in Frankfurt trading as investors concluded that Mr. Hiesinger, who became chief executive in January 2011, was grappling with the company’s problems.

“The track record of new management has been very solid,” analysts at Credit Suisse said in a note to clients Tuesday. “They are dealing with perhaps some of the most difficult issues of ThyssenKrupp’s existence.”

Blame for the problems fell on three members of the company’s six-member executive board. ThyssenKrupp said the three had agreed to terminate their contracts at the request of the company’s supervisory board.

The managers are Olaf Berlien, whose responsibilities included plant technology; Jürgen Claassen, the company’s longtime head of communications; and Edwin Eichler, who was in charge of Steel Americas. About 50 managers have already left the company after they were found to have violated compliance codes, Mr. Hiesinger said.

Mr. Claassen, who was also responsible for compliance with the company’s ethics rules, has been the subject of articles in the Handelsblatt newspaper and other news outlets accusing him of taking journalists on junkets that were considered lavish even by the flexible standards of the European press.

The Essen prosecutor’s office, which investigated the accusations, said last week that it had found no evidence that the trips broke any laws.

Questions have also been raised about whether top managers concealed the true extent of the company’s problems, but Mr. Heinrich said there was no evidence of wrongdoing.

“To date there are no facts indicating compliance infringements or illegal conduct by any of them,” he said.

But the huge loss, at a time when most big German companies continue to do well, was a further blow to ThyssenKrupp’s reputation.

In July, the company paid a €103 million fine to the German Cartel Office following accusations it was part of a conspiracy to fix the price of railway tracks sold to Deutsche Bahn, the national railroad, and other customers. The company warned Tuesday it may face additional investigations or lawsuits stemming from its involvement in the cartel.

Krupp, which merged with Thyssen in 1999 following one of the first hostile takeover battles in German history, was once the very symbol of the country’s industrial might — for better or worse.

Founded in 1811, Krupp was responsible for many advances in steel technology but also developed and built the cannons and other weapons that provided the foundation for German militarism in the 19th and 20th Centuries. During World War II, Krupp used slave labor at its factories. Its top managers were later convicted of war crimes, though they served only brief prison terms.

In recent years, ThyssenKrupp has been overshadowed by companies like Daimler and Siemens, reflecting a shift in Germany’s economic center of gravity from the Ruhr Valley to the south. Daimler is based in Stuttgart, Siemens in Munich.

With sales of about €40 billion in the fiscal year ended Sept. 30, ThyssenKrupp has about half the revenue of Siemens and a little more than a third the sales of Daimler. Still, it remains an enormous company with 152,000 workers, including 58,000 in Germany.

Besides making steel, primarily for automakers, ThyssenKrupp also makes elevators, builds and equips factories, and manufactures submarines and other naval vessels.

Mr. Hiesinger, a former Siemens executive, acknowledged Tuesday that “our leadership culture has failed in many areas of the company.”

“In the past there has been an understanding of leadership in which ‘old boys’ networks’ and blind loyalty were more important than business success,” he said. “And there were obviously some who thought that rules, regulations and laws do not apply to everyone.”

“I am aware that through this attitude we have lost a great deal of trust and credibility,” Mr. Hiesinger said. “We must now earn back both.”

Article source: http://www.nytimes.com/2012/12/12/business/global/record-loss-for-embattled-thyssenkrupp.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Rhode Island City Files for Bankruptcy

August 1, 2011 by Leave a Comment

Even as officials in Washington pledged to cut domestic spending, the city of Central Falls, R.I., landed in bankruptcy court on Monday, a stark reminder that some American cities already have debts so overwhelming that no amount of belt tightening can set things right.

“This is not simply a Central Falls issue — this is a statewide issue and even a national issue,” said Gov. Lincoln Chafee, an independent who served as a Republican in the United States Senate. “We have to match our revenue to our expenditures.”

Central Falls got into trouble, above all, by promising its police and firefighters generous retirement benefits without ever setting aside enough money to pay for them. The benefits were often set by outside arbitrators, under a state law that gave rise to uniform benefits across the state, even in towns too poor to afford them. Weak accounting rules masked the problem until too late.

Now Rhode Island’s smallest city is struggling with the same problem as Washington — the biggest overruns are in the programs that are hardest for any elected official to cut, old-age pensions and retiree health care.

After spending weeks trying in vain to get its retired police and firefighters to accept benefit cuts, Central Falls now expects to impose just that in bankruptcy court. The retirees will get smaller pensions, in some cases so much smaller that the city offered “circuit breakers” to make sure no one’s benefit fell below $10,000 a year. At the same time, the retirees will have to pay a portion of their health care premiums.

Meanwhile, Central Falls’ bondholders appear to be unscathed, thanks to a state law passed just last month, clarifying that the bondholders have a secure interest in property taxes, which continues even in bankruptcy.

It is much the same decision that officials are struggling with in Washington and in the European Union: whether public workers or bondholders should suffer, and how much. Rhode Island’s decision to spare bondholders, because its cities need to be able to finance their operations, is one that’s likely to be repeated in painful steps in other states and cities across the country.

Municipal bankruptcy filings have been rare, mostly involving small single-purpose districts, rather than cities or counties. But there could be an uptick, as cities struggle with reduced property tax receipts, states cut back on aid, and federal expenditures for programs at the local level dry up. Jefferson County, Ala., has also said it will decide this week on whether to declare bankruptcy, and Vallejo, Calif., has been in Chapter 9 for a grueling three years.

Elsewhere, cities like Harrisburg, Pa., have sought relief in special state programs that offer some of the same tools as the federal bankruptcy law. Rhode Island created such a program last year, and several mayors say they are considering it, because even after raising taxes, laying off workers, and selling public assets they cannot get ahead.

“Services have been cut to the bone,” said Central Falls’ state-appointed receiver, Robert G. Flanders, who spoke alongside Governor Chafee. “Taxes have been raised to the maximum level allowable.”

Article source: http://feeds.nytimes.com/click.phdo?i=68a6823134917c647eb44ea1241c09da

Filed Under: Business News Tagged With: , ,

Audit of Pentagon Spending Finds $70 Billion in Waste

March 30, 2011 by Leave a Comment

The Government Accountability Office, a Congressional watchdog, said the biggest program, the F-35 Joint Strike Fighter, accounted for $28 billion of that increase. Other systems also had significant cost overruns, the agency said, adding that the increases could force the Pentagon to cut the number of ships and planes it buys.

The auditors said many of the problems occurred because the Pentagon began building the systems before the designs were fully tested.

The findings were significant because Congress and the Obama administration have promised to change many of the practices that have long allowed weapons costs to spiral out of control.

President Obama signed a law in 2009 to improve contracting. The accountability office said that Pentagon officials had done a better job in starting new programs. But the agency also found that most of the new programs were not “fully adhering” to the best procedures, leaving them “at a higher risk for cost growth and schedule delays.”

Pentagon officials questioned some of the calculations. But Nancy L. Spruill, a Pentagon acquisition official, added in a letter to the auditors that the military was determined to “address cost growth where it is real and unacceptable.”

The defense secretary, Robert M. Gates, has acknowledged that the Pentagon lacked discipline as its budget more than doubled after the 9/11 terrorist attacks. But with military budgets tightening, Mr. Gates has canceled several expensive systems and sought simpler alternatives.

All told, the accountability office said, the projected cost of the Pentagon’s largest programs has risen by $135 billion, or 9 percent, to $1.68 trillion since 2008.

It estimated that about $65 billion of that increase resulted from decisions to buy more of some systems, like mine-resistant vehicles and Navy destroyers, than had been planned.

But it said the other $70 billion of increases appeared “to be indicative of production problems and inefficiencies or flawed initial cost estimates.”

The auditors also found that a significant part of the total cost increase for nearly 100 programs came from just a few of the largest and oldest ones.

The F-35, which is supposed to become the main fighter for the Air Force, the Navy and the Marines, had by far the worst problems. The Pentagon has revamped the program, led by Lockheed Martin, twice over the last year. It has budgeted an additional $6 billion for development, as well as the projected $28 billion increase in production costs, for a program that is expected to cost well over $300 billion.

The report indicated that the Pentagon also had to spend $9 billion more on research and development to fix problems with satellites and other systems that had already entered production.

The auditors said the biggest problems occurred when the Pentagon changed the capabilities it sought or started production before critical technologies were ready.

Article source: http://www.nytimes.com/2011/03/30/business/30military.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,