Metro Detroit's two mortgage company giants — Rocket Companies and United Wholesale Mortgage — have experienced big profits, growing market shares and high industry rankings since going public during the COVID-19 pandemic. Yet their stock prices remain stuck in the toilet. The sagging stocks have led to much shareholder grousing, including on online message boards, and in the case of Rocket, the slump has attracted shareholder lawsuits and could even affect how much future philanthropy its founder and chairman Dan Gilbert can give. Detroit-based Rocket Companies, the nation's No. 1 mortgage originator, which has more than 15,000 employees in downtown Detroit, closed Thursday at $16.90, below its August 2020 initial public offering price of $18. Rocket's stock briefly spiked in March to over $40 per share on speculative trading that many compared to the Reddit-induced GameStop rally from early in the year. It then hoovered between $22 and $25 for a couple months before dropping to more or less current levels in early May, after the company issued guidance about shrinking profit margins. "There are very few businesses that are more sensitive to rate increases than UWM and Rocket," said Matthew Roling, executive director of the Office of Business Innovation at Wayne State University's Mike Ilitch School of Business. "You have nowhere to go but up for rates. And more than anything else, that’s what is weighing so heavily on UWM and Rocket." 

You’ve heard time and time again that the coronavirus pandemic triggered the shortage of workers we are seeing today -- but it may not be for the reason that you think. Matt Piszczek, a business professor at Wayne State University, says that the assumption that unemployment checks kept people home during the pandemic is incorrect. Instead, a lot of people began to rethink their careers, priorities and life goals after the health crisis hit. “The pandemic gave them an opportunity to reflect on what’s important,” Piszczek said. “So, things like flexibility became more important than an extra dollar an hour.” 

Workers at Kellogg’s cereal plants in cities that include Battle Creek, and thousands of John Deere workers have walked away from their jobs to strike. "There’s no doubt that there’s a lot of pent-up frustration in the workforce," said Marick Masters. Masters, a professor of business at Wayne State University, believes contract disputes over items which include low wages, are driving this worker stoppage. "We could see a growing militancy on the part of some workers because they are tired of the cumulative effects of declining wages, they see inflation on the rise, and they see the devastating effects of the pandemic, in terms of lost businesses and jobs," he said. 

By Nancy Derringer  When the Detroit Regional Chamber convenes its Covid-delayed Mackinac Policy Conference later this month, it will require attendees to produce proof of vaccination to register. The usual suspects are balking, but the Chamber is standing firm. Its CEO, Sandy Baruah, had a kidney transplant in 2019, and is no doubt on anti-rejection drugs, i.e. immunosuppressants. He probably has a dim view of the trust-me-I-have-natural-immunity sermon preached by Covid survivors. Corporations like these – large, multinational, customer-facing – have advocated for a variety of social causes that some conservatives have dug in their heels on. Same-sex marriage and civil rights for LGBT individuals are only one example. Climate change and environmental impact are driving the auto industry in the direction of electric vehicles and renewable energy. Expect worker safety and security to be a higher priority, not only in company policy, but in their lobbying, too; tax-supported universal preschool isn’t just good for children, but for working parents. And good talent is hard enough to come by as it is. But Matthew Roling, an instructor at Wayne State University’s Mike Ilitch School of Business, warns the rest of us not to get too complacent with these apparent good deeds. “Businesses never do things for altruistic reasons,” Roling said. “It just so happens that the intersection of customers and talent align themselves (with business’ bottom line). Because the moment those issues diverge, they won’t be there to save us.” 

The Global Chip Shortage rages onward and, as of July, has resulted in more than one million unmanufactured vehicles in the U.S. alone and could reportedly extend into 2023. The major question of how such a massive mismatch between supply and demand could exist has multiple answers with several, unrelated root causes (e.g. pandemic affects on usage patterns, an impactful fire at a major Japanese plant caused by an electrical overload), however one of the most frequently suggested reasons was a mismanagement of the supply chain. “When the drop in automotive sales at the beginning of the pandemic happened, automotive companies just halted their orders. There was an implicit tradeoff there: saving cashflow and avoiding potential obsolescence,” said Timothy Butler, professor of global supply chain management, Wayne State University. As Butler points out, another key example of tradeoffs is single sourcing versus competitive sourcing. “If you single source and the supplier goes on strike or has such a catastrophe, you have a single point of failure,” cautions Butler. “Additionally, if that desirable supplier is also single-sourced to your competitor, you might have risks in sharing Intellectual Property.” So what have we collectively learned, if anything? “We all have to admit that hindsight is 20/20,” states Butler, “but these types of problems happen over and over again. Each is viewed as a one-off, but it’s the same thinking that undermines the successful endings.”

A growing executive master's degree program at Wayne State University offers students a flexible opportunity to build skills specific to the automotive and complex manufacturing fields. John Taylor, chairman of the university's Department of Marketing and Supply Chain Management in the Ilitch School of Business, and Lori Sisk, a lecturer and career coach in the school, talk about the program, which is also designed as a pipeline of talent for Detroit-area supply chain businesses. 

Detroit's automakers recorded major profits for the first half of the year, but the benefits of those earnings won't land evenly among their employees and could delay wage raises and shrink profit-sharing bonuses for some autoworkers. The global semiconductor shortage has forced auto plants to idle around the world, in some cases for months at a time. Automakers are prioritizing their highest-margin vehicles and those that help them meet fuel efficiency and emissions standards. That leaves employees at plants that often already have felt the pains of layoffs feeling further left behind. "I would worry first about the impact on profitability," said Marick Masters, a professor at Wayne State University's Mike Ilitch School of Business, adding the companies could argue the events that caused the chip shortage and affected profits "are really beyond their control." A fire at a chip plant in Japan, the spread of COVID-19 in Malaysia and severe weather in Texas and Europe have led to parts constraints that are out of the automakers' control. Masters expects the chip shortage and other supply concerns will affect the next set of contract negotiations in 2023 between the UAW and Detroit's automakers. The UAW is likely to argue for hourly pay increases so members can depend less on variable pay like profit sharing. "Workers, you've been used to getting for several years anywhere from $6,000 to $12,000 profit sharing," Masters said. "You kind of depend on that. And I think that if that becomes more problematic going forward, they're going to be forced to take a harder look at hourly wage rates."

Have some patience for that neighbor with the unkempt grass this summer — it could be the supply chain disruptions of the past year just won't get off their lawn. Supply chain woes, from lawn and garden equipment to the global computer chip shortage afflicting the auto industry, continue to drag down many metro Detroit businesses otherwise in boom mode from record demand. There's been little sign of relief from skyrocketing shipping costs, which stem from the near halting of international trade last year due to the COVID-19 pandemic and the unforeseen spike in consumer demand. From circuit board suppliers, to tier ones and OEMs, the impact of shipping delays and resulting parts shortages has rippled through every level of the automotive supply chain. Supply issues, most notably the microchip shortage, are predicted to cost the global auto industry more than $110 billion this year, according to Southfield-based consulting firm AlixPartners. OEMs generally bear the brunt of increased shipping costs, but suppliers suffer from delays, said John Taylor, chair of the department of marketing and supply chain management at Wayne State University. To prevent assembly lines from idling, automakers will often demand that suppliers keep a large amount of "just in case" inventory and penalize them for failure to deliver. "It costs a lot of money to sit on inventory," Taylor said. "You have to finance it, store it ... it goes obsolete. You want a solid, rapid flow of goods from around the world." Without that, suppliers are forced to guess how much inventory they need, while factoring in the uncertainty of when it might actually arrive, Taylor said. The guessing game has become a familiar one across industries.  

As shoppers dust the pandemic cobwebs off their wallets, they’re noticing prices aren’t the same as they were in 2020. The inflated prices are hitting some products more than others. The federal government tracks monthly price changes for more than 300 consumer products, ranging from cars and college textbooks to bananas and pet food. “Inflation is one of those things people know just enough about to be afraid of,” said Matthew Roling, adjunct finance professor at Wayne State University. “So it’s really easy for people to use it as a wedge to drive agendas that might be unrelated to the core issue.” There’s a litany of reasons for why prices are higher for various products, but it all comes down to supply and demand, Roling said. While it may seem like inflation is running rampant, Roling said he expects this to be temporary. “It’s a lot easier to turn off the global economy than to turn it back on,” Roling said. “Demand is returning to normal at a faster rate than supply is. So everyone is going back to buying all the food and the vacations and the clothes and the gas in the cars – they’re returning to the same behavior they had a year-and-a-half ago.” Roling expects prices to settle in the next couple months. “If it’s still here nine months from now, then it’s a problem,” Roling said.

With more than 100 people being nominated for the Arab America Foundation’s annual 40 Under 40 initiative, the field was packed for 2021. The program spotlights Arab American professionals in all fields and business sectors, including education, law, public service/politics, non-profit, business leaders, entrepreneurs, engineers, medical professionals, artists, entertainers, writers, and media representatives. All awardees are under the age of 40, excel in their professions, and are engaged in promoting their heritage and culture to empower their communities and make a difference. Adeeb Mozip is a Yemeni American who has served as the director of business affairs at Wayne State University Law School since February 2017. He has served in a number of capacities at Wayne State University including manager for financial affairs in the office of the dean of the WSU Library System. Prior to that, he was a budget analyst with the WSU Library System and an accountant with WSU’s Sponsored Program Administration. He is a member of the WSU Higher Learning Commission accreditation team. In this role, he ensures university-wide conformity to the HLC and federal reporting and compliance requirements.

All week long on The Rebound Detroit, we're shining a light on metro Detroit's small businesses and the people who work tirelessly to make them successful. It's been more than three weeks since our state's remaining COVID-related restrictions lifted, so we're exploring the hit small businesses have taken during the pandemic, what recovery is looking like now, and the road ahead. For many metro Detroit small businesses, government aid during the pandemic has been a vital lifeline. Where payroll wasn't a business' largest expense other federal programs sought to fill the gaps, like the Shuttered Venue Grant and the Restaurant Revitalization Fund; we saw locally a major hiccup with the latter, when funds ran out before all those approved could get their cash. "Big businesses have continuity plans," said Prof. Bertie Greer, associate dean at Wayne State's Mike Ilitch School of Business. "They have already put together some thoughts and done risk management," she said. On top of generally having less cash on hand, makes smaller businesses especially vulnerable during a period of uncertainty like a pandemic, Greer said.

The auto industry feared total collapse when the coronavirus pandemic put a halt to production and tanking vehicle sales brought on flashbacks to the Great Recession. Over the course of just a year, though, the problem has reversed. Automakers cannot make new cars fast enough. The reason why is that the industry is now grappling with a $110 billion dilemma the size of a fingernail. That's the estimated global revenue that will be lost this year due to the ongoing shortage of semiconductors, according to a recent analysis by Southfield-based AlixPartners. A single car part can use up to 1,000 of the tiny computer chips, which are also used in cellphones and other everyday electronics in hot demand during the pandemic. As a result of the supply shortage, new car production is expected to be cut by 4 million units this year, leaving automakers and suppliers reeling. Ford Motor Co., which has been hit particularly hard, said it expects to lose half of its production for the second quarter. While the fractured supply chain poses daunting challenges to profitability, the consensus is that it beats the alternative of a sustained economic recession, which most experts now are not expecting. "Despite all the dire predictions, there seem to be some signs of improvement," said John Taylor, chair of the department of marketing and supply chain management at Wayne State University. While Detroit remains the "mecca of automotive," local automakers and suppliers would be wise to sharpen their focus on the much larger, existential challenge looming ahead, Taylor said. That is the race for dominance in the electric and autonomous vehicle space, which many observers would argue Silicon Valley is winning.

Bertie Greer, associate dean at Wayne State's Mike Ilitch School of Business, said companies have a lot to lose, or to gain, based on the tone they are set as we return to work. “Right up until we had the pandemic, conversations about flexibility at work or remote work were still a no-no. This pandemic really, has squashed that argument," she said. Greer, who also knows what it's like to be a working mother herself, said the pandemic has shown us workplace flexibility can no longer be a perk, but is a necessity in some cases. COVID, she said, taught us that it's possible to accommodate that. “It becomes second place to see a child walk in the back of a video conference. It has become second place to hear interruptions," Greer said. Data shows that inflexible work cultures have contributed to some women having to choose between caring for a loved one or advancing in their career or keeping a job. “There is this issue of not necessarily gender, but gender plus," Greer said, the idea that employers are not concerned with gender, but rather what traditionally comes with it; kids, household duties, care-taking, etc. “We’re going to have to work with our employees," said Greer. "Now we know we have more tools to use. Invite these tools into the workplace and figure out how to use them to retain your best and brightest.”

Home prices are hitting record highs, and rent is also on the rise, making it difficult for some people to find and keep a place to live. According to Zillow, the average home value in Michigan is more than $205,000, up 13% from April 2020. Rent Cafe reports the average rent in the city of Detroit is up to more than $1,100 a month, a 4% increase from last year. This is a problem that can cause even more damage down the road, as the CDC said it's a basic necessity for families to find safe and affordable housing. "You really just need state and federal government to create tools that make it easier for developers to build affordable housing and for residents to qualify and to live in affordable housing," Matthew Roling, an adjunct professor of finance at Wayne State University said. According to the National Low Income Housing Coalition, Detroit suffers from a deficit of about 100,000 housing units for low-income residents. The U.S. has a shortage of 7 million units of affordable housing. Roling said the term affordable housing typically refers to government-subsidized housing for low-income residents. "But these days the housing market, the 'for sale' residential market has exploded in value so much in the last year and a half, the affordable housing conversation in a lot of markets could also reasonably be construed to include that," he said.

The UAW is prepared to battle General Motors at two new battery cell factories if the automaker won't allow a simplified process to organize workers there. At issue in the new plants, which are under construction and are joint-ventures that aren’t automatically UAW represented, is a process that would allow workers to check a box on cards to allow them to organize, versus a drawn-out, traditional vote process. The outcome of organizing the plants will carry far-reaching consequences for future electric vehicle workers, a point fueling the UAW's sense of urgency for this upcoming battle. The union leadership knows organizing these two plants is "a critical event for the UAW and they know the importance of it," said Marick Masters, professor of business at Wayne State University. Industry experts say it is inevitable that there will be more future EV battery cell plants across the auto industry, so the unionization at these two GM plants could be precedent-setting for workers down the road. It is critical the union's local leaders prepare an organizing campaign as soon as possible, Masters said.

While the world is trying to crawl out of a pandemic recession, the stock market is doing just fine. Michigan is no outlier, as 14 of Michigan’s 16 public Fortune 500 companies have seen gains in share price since the start of 2020. “The broader economy might not have had a V-shaped recovery, but the stock market bounced back very quickly last April and May and even more so this fall,” said Matthew Roling, Wayne State adjunct business professor. “The market tanked last March and then it just climbed right out.” How can the stock market thrive when the rest of America stumbles? Because of three factors, Roling said: Stimulus, interest rates and Robinhood.

From lumber to cheese to bath bombs to auto parts, shortages abound as the world's producers, distributors and retailers can't accurately match supply to demand. The result is empty shelves and skyrocketing prices ... with no end in sight. The fundamental issue behind each of these disruptions stems from the immediate impact of the pandemic. As stay-home orders landed across the globe and factories shut down, orders dried up in anticipation of a drawn-out recession. But it didn't play out like that. For instance, demand shifted from restaurants to grocery stores — remember the great toilet paper shortage of 2020? — and government stimulus buoyed, and sometimes boosted, consumer spending. The auto industry's ongoing semiconductor conundrum is a blueprint on how improperly assessing future demand can reverberate through the supply chain. For Zingerman's, the story is of similar dynamics. Cheese production slammed to a halt as Italy and Spain and other parts of Europe battled the virus last spring, followed by mandatory store closures in the U.S. Orders dried up, cheese spoiled, distributors docked their ships. But demand never faltered and as the industry came back on line, it's battled to play catch-up. To meet demand, purveyors ordered more imported cheese than necessary. This leads to even greater shortages from producers and distributors. So if a retailer can't get access to a wheel of imported Fleur de Marquis now, it may order more than normal when it is available to ensure it doesn't run out of stock in the future. This is called the bullwhip effect, said John Taylor, associate professor of global supply chain management and chair of the department of marketing and supply chain management at Wayne State University. "Companies are having difficulty figuring out what their customers' real demand is and are putting a lot of extra orders into the system," Taylor said. "Everyone is hedging their bets. This all leads to a lack of clarity what the demand signal really is. When you get a bullwhip, things begin to see out of stock conditions and then overflowing inventory. Industries are gyrating from having not enough product to having too much."

Alexander Davidson, assistant professor of marketing, wrote an article for The Conversation. “Customers give higher ratings and tips to politically conservative Airbnb hosts, Uber drivers and waiters than to ones with more liberal leanings, according to new peer-reviewed research I co-authored. That’s despite evidence we found that consumers may actually expect the opposite. To reach the first conclusion, a colleague and I conducted four different studies. The first involved poring over about 50,000 Airbnb listings in 16 U.S. cities. We examined average ratings and compared them with the percentage of Republican voters in the city, based on recent elections. We found that Airbnb hosts in cities with a greater share of Republican voters tended to have higher ratings. Specifically, an increase of one percentage point in a city’s proportion of Republicans correlated with a 0.12 increase in its average Airbnb rating. While that may seem small, Airbnb ratings are often quite high, which means a small change can be significant.”

About 35,000 hourly jobs could perish across the car industry as GM and other automakers move to EVs, said Marick Masters, a Wayne State University business professor who specializes in labor issues and has studied the potential impact of transitioning to EVs. GM has said all of its light-duty vehicles will be zero-emissions by 2035 and that GM will be a carbon neutral company by 2040. The typical internal combustion engine has about 2,000 parts in it, Masters said. Whereas EVs use far fewer parts, some parts might be bigger such as batteries, but fewer people are needed overall to make EVs. "There will be some job loss," Masters said. "The question is how much of that can be mitigated?" If the move to EVs is accelerated by politicians pushing to control climate change and improve infrastructure with more charging stations, that will only hasten the “dislocation of jobs," Masters said. “I think anybody has reason to be worried," Masters said. "You also have to factor in how popular are electric vehicles going to be to foreign competitors, what is the cost to make them, how profitable will they be versus internal combustion ... all of that impacts the performance of the company and that will impact jobs, too.”

Kar's Nuts, the maker of Sweety 'N Salty trail mix and Sanders Chocolates, is changing its name to Second Nature Brands as the Madison Heights snack food company seeks to broaden its portfolio and position itself with better-for-you offerings. Kar's, the company's biggest brand, will continue to exist, but the company itself is letting go of its 90-year-old identity that traces its roots to Detroit. Instead, the business is opting to use the name from the gluten-free, non-GMO trail mix brand it launched about a decade ago as it continues on a growth trajectory following the acquisition of Sanders in 2018. Changes to an umbrella company's name won't always matter for consumers as it's less visible than its brands, said Laura McGowan, a marketing professor at Wayne State University. Given Kar's following, eliminating the brand completely would be risky, but changing the over-arching company's name to a more health-oriented name to take advantage of consumer trends could be worth the costs. "In this case, if you think of Second Nature as a natural option and that it's taking care of people, it complements the long-term trends toward healthier choices going on," McGowan said. "People value and place a higher value on companies doing the right thing by their consumers."