Dave Cole's Retiring, But He's Not Goin' Fishin'

Now that Dave Cole has made his retirement from the University of Michigan official, what's next for OSAT - the U-M Office for the Study of Automotive Transportation, sponsor of the Traverse City Management Briefing Seminars?

Mr. Cole has been OSAT's longtime director and founded the Traverse City seminars in 1972, presiding over each session since then.

Mr. Cole will join ERIM, the Environmental Research Institute of Michigan, this fall to head a new automotive research activity.

It's understood that most OSAT key personnel will join him at ERIM, where he will work with ERIM President Ken Baker, a former General Motors Corp. research vice president who joined ERIM last November. "I'd go with him if he went to Alaska," one Cole loyalist tells Ward's.

ERIM is a not-for-profit research, technology and consulting firm with a close relationship to U-M dating to 1947.

OSAT and ERIM have ties to the U-M College of Engineering, suggesting that future Management Briefings may continue under the university's aegis with Dr. Cole remaining at the lectern.

Ward's Automotive Reports first revealed his plan in mid-July, and a more detailed account appears in the August issue of Ward's AutoWorld.

ERIM started out developing remote sensing technology for collecting on-ground information from high-flying planes and, later, satellites, primarily under U.S. government contracts. After this secret work caught the attention of student protesters during the Vietnam war, the organization changed its name and sought less-sensitive contracts.

More recently ERIM has shifted its emphasis to manufacturing and information technology pursuits.

Only a small part of ERIM's contracts currently are automotive related, however. By combining OSAT's research capabilities with its expertise, the firm expects to expand its automotive business.

OSAT, for example, conducts major automotive research examining supplier and technology trends but doesn't take the next step: Implementing strategies to act on the results.

"It's a collaboration - a win-win," says one source close to the negotiations.

Mr. Cole says he expects to take about 20 OSAT staffers with him if negotiations with the U-M prove successful. Reportedly among them is Jay Baron, OSAT associate research scientist and manager of manufacturing systems and an expert in the area of quality through dimensional control.

Although no glitches are expected, Mr. Cole tells Ward's that financial details of the arrangement remain to be worked out.

"I'm retiring from the university, so that's not a problem," he says, but that's not true of all of the other OSAT staffers invited to join him at ERIM, so their U-M termination terms and remuneration at ERIM must be resolved.

"They're asking for ransom; it could amount to $5 million," says one close observer, referring to the amount U-M wants from ERIM for OSAT.

Assuming the deal is finalized, OSAT will continue as an activity of the U-M Transportation Research Institute, says OSAT Associate Director Michael S. Flynn. Right now OSAT has 30 staffers.

Mr. Flynn says it's possible OSAT would do research for ERIM and vice versa. And future studies may not use the Delphi moniker used by OSAT for years. "Some of our clients think the Delphi name can be confused with Delphi Automotive."

Mr. Flynn says he doesn't know whether OSAT will continue to sponsor the Traverse City meetings, but separately Mr. Cole indicates his new organization may affiliate with the U-M.

For his part, Mr. Cole's retirement announcement was short and void of noticeable emotion. He waved a small book entitled Who Moved My Cheese? dealing with the subject of change, implying that at 63 he's ready for a change.

His ERIM operation - if not the entire organization - also may have a new name. "We're thinking of something like the Center for Automotive Research," he says.

In a prepared release that made no mention of the Cole tie-up, Mr. Baker on Aug. 8 said ERIM has developed a business plan that "within five years (will) place us in the top 10 not-for-profit organizations in the country."

He singled out the automotive industry as offering an "immediate potential" for ERIM by focusing on ways automakers and suppliers can cooperate more closely to, among other things, develop new vehicles in 12 months, adapt new vehicle safety systems and reduce order-to-delivery times by two weeks.

"As a collaborative innovation community," he said in describing ERIM, "we will use our technical talent and other resources to bring together the best minds from industry, academia and other not-for-profits to address societal and technical challenges too large for one institution to solve alone."

One of the "best minds" from academia apparently will be Dave Cole's.

ERIM, the Ann Arbor outfit Dave Cole is teaming up with, is hardly a household acronym. Yet its roots go way back to the post World War II era and into the turbulent '60s as a hush-hush organization doing business with the U.S. Department of Defense and other governmental agencies.

At its peak the organization employed 750 and handled $75 million in government contracts annually.

Why all the secrecy? Because ERIM's predecessor organizations were developing sensing technology for secretive U.S. surveillance systems collecting ground information via high-altitude aircraft and satellites.

During the '60s the organization was operated under the auspices of the University of Michigan. When Vietnam War protesters found out, they raised Cain and the U-M was forced to spin off the operation.

That's when the acronym was hatched: It stands for the Environmental Research Institute of Michigan. "The university thought that `environmental' was a good name," a close observer wryly comments. And today about 25% of its contracts come via the EPA and other government sources that actually do deal with environmental concerns. ERIM's sensing technology, for example, can provide valuable information about floods, fires, crops and other on-ground information. The information is collected in digital form, then analyzed to provide action guidelines. "It can tell what kinds of crops grow best in which locations," says the source.

A not-for-profit organization, ERIM found it increasingly difficult to compete against for-profit companies as government funding shifted in the 1990s. An initial public offering was considered to keep the outfit afloat.

In spring 1997 ERIM's board instead decided that it would continue sliding downhill as a not-for-profit lacking marketing funds and personnel incentives. The solution was to sell the "old" ERIM to another Ann Arbor company in turn for a $70 million endowment in 1998 to start anew as an information technology concern.

Next, ERIM in late 1998 acquired the Center for Electronic Commerce (CEC), another not-for-profit Ann Arbor high-tech outfit, to mesh with its manufacturing consulting and research work. CEC previously had been part of the Industrial Technology Institute, which had been located on U-M property and served as an incubator for technology flowing from the university to industry. ITI was not successful.

ERIM today employs approximately 90 people. The idea is to enhance the value of the studies and research OSAT has been conducting for many years by moving to the next step: action on the findings. "We want to transfer theory to practice," says the WAW source.