As difficult as it might be to imagine today, there was a time when people worried the domestic auto industry was giving the University of Michigan too much money.

It was 1923, less than two decades after the founding of the Ford Motor Company, and the pioneers of Michigan’s booming automotive industry had already begun pouring money into their state’s flagship university.

Upton Sinclair, an eminent muckraking journalist of the day, nicknamed the University of Michigan "the University of Automobiles” — suggesting that the influence of the auto industry could corrupt the academic independence of the University.

“The University of Michigan is another of these huge educational department stores,” he wrote, “a by-product of the sudden prosperity of the automobile business.”
Indeed, two of Ford’s initial shareholders, James Couzens and Horace Rackham, were two of the University’s biggest benefactors.

Couzens gave the University $600,000 in 1923 for the construction of a dormitory — Couzens Residence Hall — on what was then the campus’s northeastern fringe. A decade later, Rackham’s wife Mary gave the University $2.5 million for the construction of the Rackham Building and another $4 million for graduate-level research, providing the foundation for the University’s Rackham School of Graduate Studies.

Auto industry money helped grow the University to its current size and prominence. The University’s Dearborn campus was created in 1956 after the Ford Motor Company donated Henry Ford’s 210-acre estate and $6.5 million to the University, and a donation from C.S. Mott, an auto industry pioneer who was once GM’s largest shareholder, helped turn Flint Junior College into a four-year program administered by the University.

“The legacy of Ford is evident in almost this whole campus,” said Mary Lynn Heininger, director of corporate relations at the Dearborn campus. “They have contributed to who we are.”

And yet, as much as the wealth of the auto industry shaped the University through the last century, the relationship rarely went beyond philanthropy. Despite their close proximity, the auto industry and the University of Michigan typically struggled to establish lasting research relationships.

But the University’s relationship with the auto industry has undergone a fundamental shift in the past decade. Michigan’s struggling carmakers have reset their priorities, spending millions of dollars on new collaborative research institutions while cutting back long-standing philanthropic support.

While philanthropy from the three companies averaged a combined $4.8 million per year between the 2003 and 2008 fiscal years, donations to the University are on pace drop by about 60 percent during the current fiscal year.

Meanwhile, the Detroit Three gave the University about $5 million for research last year — about 90 percent of all auto industry research funding. The trend has continued this year, with GM investing heavily in University research to develop electric vehicles like the hotly-anticipated Chevrolet Volt.

Industry-funded research continues to makes up a small fraction of the University’s total research budget — last year, it was $876 million, with the federal government footing most of the bill — but both the Detroit Three and the University have discovered that the partnership’s value goes beyond money, offering the opportunity to exchange ideas, technology and talent.

Daryl Weinert, director of the University’s Business Engagement Center, said the Michigan auto industry’s philanthropy over the past century helped transform the University into a “reservoir of interesting ideas” and one that can now help Detroit’s automakers solve their long-term challenges.
“This is a place where new ideas get formed, and the auto industry right now, they need that,” Weinert said. “If they’re going to find a way out of the current situation, it’ll be through innovation, and therefore, our research interactions are really a win-win for both sides.”

MISSED OPPORTUNITIES

University professors and students have conducted research on automobiles since the early days of Michigan’s auto industry — although not always with the level of productivity that could have been hoped on either side.

“In the past, the University was not always easy to work with,” said John LaFond, a retired Ford engineer who served as the company’s development director at the University. “There was a lack of proper communication. It was difficult for the University to see the needs of Ford, for one, and it was difficult for Ford as an automotive company to get the responsiveness of the University.”

In the late 1920s, the University’s automotive engineers worked in a leaky annex to the engineering lab — a wooden shed. For much of the century, research projects were scattered among faculty and departments, with few long-term projects and little central coordination.