ANN ARBOR—Research spending at the University of Michigan reached $875.8 million in 2007-08, an all-time high and a 6.4 percent increase over the previous year.

The federal government provided 69.8 percent of the funds. But while the federal commitment edged up 2.7 percent last year, industry sponsorships surged 11 percent, following a nearly 15 percent jump the previous fiscal year.

Those numbers suggest that U-M’s drive to forge stronger ties with industry—and to help resuscitate the Michigan economy—is finally bearing fruit, said Stephen Forrest, vice president for research.

“I think we’re seeing the start of a trend, a hint that things are moving in the right direction,” said Forrest, who cautioned against trying to draw too many conclusions from two years of data.

“What we can say with confidence is that this effort to strengthen ties with industry has been a steady push for several years now, and the word is out that we strongly support this from the highest levels of the university,” Forrest said. “And it’s finally starting to take hold.”

U-M consistently ranks among the nation’s top five research universities, based on R&D expenditure statistics compiled by the National Science Foundation. But Forrest believes that continued growth of the U-M’s world-class research enterprise will require what he calls “a new funding model.”

Federal research funding is likely to stagnate in coming years, so the University must rely more heavily on partnerships with businesses, industry and foundations, he said.

By strengthening ties with the private sector, the University can secure its own future while helping Michigan move from a manufacturing-based to a knowledge-based economy.

“It’s our responsibility to participate in the growth of the new economy, simply because we can,” he said. “We have the essential expertise, so we’re well-positioned to help make it happen.”

One example of a thriving industrial partnership is the Ford-U-M Innovation Alliance, launched as a $2 million endeavor in 2006.

The Alliance teams more than a dozen U-M faculty members with some 20 Ford Motor Co. scientists and engineers to develop a host of new technologies—in-vehicle web-based services, new collision-avoidance systems, and techniques to improve hybrid vehicle mileage, for example.

Because the level of cooperation and the “breadth of expertise” at U-M exceeded Ford’s expectations, the Innovation Alliance has blossomed into a $5 million effort, said Ed Krause, Ford’s external alliances manager.

“When I first started doing this job for Ford about eight years ago, the University of Michigan had the reputation of being quite difficult to deal with,” Krause said.

“But in recent years, I have seen a remarkable transformation. U-M is now very much a leader in industry outreach,” he said. “Industry projects aren’t viewed as the poor stepsister any more.”

Fiscal Year 2008 ended June 30. So last year’s research numbers don’t reflect the impact of the new U-M Business Engagement Center, which officially opened its doors in mid-May. The center, at 1214 S.University Ave., provides one-stop shopping for businesses seeking student talent, university expertise, professional development for employees, and research partnerships.

In mid-July, Michigan’s 15 state universities launched the U-M conceived Michigan Initiative for Innovation & Entrepreneurship. The MIIE partners Michigan’s philanthropic organizations with university and private-business resources to launch new startups.

And several recent U-M policy changes and initiatives created new incentives for researchers to build ties with business and industry. They include:

• A policy shift that allows U-M inventors to share equity and royalties from companies holding licenses to their inventions, even if the inventor has a direct connection to the company.
• A reduction in the indirect cost rate for industrial contracts, so it matches the rate used for government contracts.
• A commitment to use the U-M administration’s entire share of licensing revenues to support collaborations with the private sector.
• The creation of the Distinguished University Innovator Award to recognize faculty for their work with the business sector.

“We’ve accomplished a lot in the past year or so that’s not reflected in the Fiscal Year 2008 research numbers,” Forrest said. “So we’re really expecting this trend to grow and strengthen in the future.”

Related Links:

• Historical Analysis of Sponsor Research Expenditures (.pdf)
• Volume of Research Expenditures By Sponsor (.pdf)