AUTOMAKERS

EV world is battery management systems,” Barrott said. “ ey are being very protective about that. But what that means is their focus and their capital to support other areas of development of the vehicle and components lessens.” e seating business is a prime example of how the automakers have shifted their parts supply strategies over the decades, Doug Del Grosso, CEO of Adient plc, told Crain’s in a recent interview.

An automaker typically purchases about 70 percent of a vehicle from suppliers and provides 30 percent of the value in house. Automakers have tightly controlled the supply chain since the Great Recession, which sent them on a survival mission to drive down costs wherever possible.

But micromanaging is no longer a viable strategy when speed and innovation are now the keys to survival.

“It’s almost gone full circle. When the seating business started, the seating suppliers had very little capability,” Del Grosso said. “Over the course of time, they built that competency to be a complete seat supplier. A lot of it was done through divestitures and acquisitions of what was formally in-house capabilities of the OEs.”

After the economic downturn in the late 2000s, which hit the auto industry especially hard, automakers tightened the leash on suppliers and began directing sourcing strategies for better visibility on costs, Del Grosso said.

“Prior to the Great Recession, a seating supplier like Adient would be sourced kind of black box, and we would control the supply chain, some of which was vertically inte-

Home Point

From Page 1

Shares of the company ursday morning were up nearly 20% right after markets opened.

Home Point’s workforce has dwindled signi cantly over the past year and more following multiple rounds of layo s and the sale to the Loan Store.

Remaining employees were informed that the deal with Mr. Cooper means their “end dates” with Home Point will be communicated “in the coming days,” according to a letter from Home Point President and CEO Willie Newman that was included in a U.S. Securities and Exchange Commission ling ursday morning.

“Additionally, there may be potential opportunities for you to apply for new roles at Mr. Cooper, and those details will be made available in the coming days and weeks,” Newman wrote.

“I think Home Point did pretty well,” Guy Cecala, executive chairman of industry trade publication Inside Mortgage Finance, told Crain’s on ursday morning. “ ey’re not going to exist (any longer) ... but to nd buyers, that’s not easy in this environment.” e environment mentioned by Cecala consists of elevated interest rates that have hammered the renance side of the business and left many a home buyer waiting to see if rates stabilize or come down; as well as a di cult residential real estate grated, some of which was bought on the outside,” he said.

Wrestling over control of the supply chain created friction between suppliers and OEMs, which boiled over when the pandemic sparked a supply chain crisis. Suppliers bore most of the pain, but it also gave them more negotiating power with customers.

Now, the transition to EVs provides new opportunity for suppliers, particularly large tier ones that are either insulated from the EV shift — such as seat makers — or those that have strong engineering capabilities and can adapt quickly, Barrott said.

“ e emphasis that we’ve seen mainly on the bigger suppliers is that they’ve been encouraged by the OEMs to bring in more of a complete solution, more of a design aspect to the component,” he said. “ e OEM is less interested in maintaining complete control over a lot of these aspects.” market where limited inventory keeps home prices high.

Del Grosso will gladly take that work o their hands. Pacing for $15 billion in revenue this year, Adient is among the world’s largest auto suppliers. It has invested signi cantly in research and development in recent years, evidenced by the newly renovated, 365,000-square-foot Plymouth Technical Center, which serves as the supplier’s North American base. e company has 3,000 engineers globally working on seating design.

Adient and other suppliers, including competitors Lear Corp. and Magna International, are aiming to position themselves as cutting-edge designers and tech companies instead of merely just manufacturers. Even for parts as primitive as seats, those companies are looking for an edge with sleeker design, thermal comfort and more environmentally sustainable material — aspects automakers are now happy to outsource, Barrott said.

Indeed, executives at two of Home Point’s leading rivals — Pontiac-based United Wholesale Mortgage and Rocket Companies Inc. in Detroit — say they have little to no interest in jumping on the M&A train, even as more distressed opportunities are likely to pop up.

“I’m so big on culture here ... it’s hard to not have anyone that’s not in our four walls,” Mat Ishbia, chairman and CEO of UWM, said recently in a roundtable discussion with reporters.

“So acquiring companies ... I look at everything, but I’m not going to do that right now,” Ishbia said. “My belief system is we have the business model that everyone wants. I don’t need to go get someone else’s business model and add it to mine. If I wanted to build their business model, I could do that, too. We’ve chosen the best business model — the perfect business model — that dominates in purchase (lending), that’s got the upside of re nances, when they come, and the upside (is that) the broker channel is growing.”

Likewise, executives at Rocket Companies, the parent company of Rocket Mortgage, say they are “opportunistic” when it comes to exploring mortgage M&A, but very few deals are of interest.

“We have to ask ourselves, what would we be buying?” Brian Brown, CFO at Rocket Companies, told analysts on an earnings call earlier this month.

“ ey just don’t have the capacity to manage all aspects of the vehicle,” Del Grosso said. “Some of our customers have gone fully back and said ‘no, I’m just going to source you the complete system. You’ll present us how you’re going to source the subcomponents, but I’m ultimately going to leave that decision to you.’” e seating CEO said its customers around the world, including in North America, have either adopted that strategy or are warming up to it. Crain’s reached out to Stellantis NV, Ford Motor Co. and General Motors Co. for comment.

“We just move faster than when the customer is trying to navigate all of that,” Del Grosso added. “It just shorts up that decision-making tree, and it allows us to get things done quicker for them.”

Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

“On the positive side, valuations have come down,” Brown said. “But we’re not interested in buying loan o cers. Of course we can take a look at technology, but in almost all cases, we nd that our technology is much more advanced than what we’d be buying.”

Brown added that acquiring portfolios of mortgage servicing rights, such as what Home Point is selling to Mr. Cooper, could be of interest, and the company has done so.

Put the comments from Ishbia and Brown together, and you’ve got the two biggest players in the mortgage industry close to ruling out any signi cant acquisitions during a period of tumult for many players in the space. And indeed, pro tability has remained elusive for multiple quarters for both of those companies.

Home Point is unlikely to be the only mortgage lender seeking buyers as the industry remains contracted. With a dearth of buyers, many might just simply turn o the lights, according to Cecala.

So what does that mean for companies like Rocket and UWM who are more equipped to weather the storm?

Most likely, the big get bigger, Cecala said.

“To the extent that a third or a quarter of their smaller competitors go out of business or get acquired, that’s likely to bene t them,” he said. “ ey’ll pick up the business.”

Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

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