By Christopher A. Sawyer
The Virtual Driver

(May 21, 2017) The word on the street is that Lotus Engineering, Inc. will be shutting most of its Ann Arbor, Mich., operations immediately, leaving only the vehicle lab operational for the foreseeable future. Sources confirmed the dyno lab was closed at the end of business on May 12, and customers with whom LEI has contracted to supply its services have been informed LEI will not be able to honor those commitments.

When asked to comment, a Lotus spokesperson in England emphatically denied LEI was closing: “Lotus Engineering Inc. is not closing; Lotus’ North American operations through LCU and LEI will continue to be based at its facilities in Ann Arbor.”

It was just under two years ago when Group Lotus announced that it was moving Lotus Cars USA (LCU) from Lawrenceville, Ga., to LEI’s offices in Ann Arbor, to “ensure that both divisions can grow their individual operations, while benefitting from improved efficiency through sharing a number of business functions.”

It was a plan that had been discussed many times in the past, but rejected as LCU was located near the port of entry for Lotus vehicles, had a small but very capable Georgia-based staff, and low overhead. Nevertheless it was felt that the move to Ann Arbor at that time offered many synergies that now will not be realized.

Lotus Engineering, Inc. was created when Group Lotus and its parent company, Malaysian automaker Proton, purchased Michigan Automotive Research Corporation (MARCO) from the remains of the bankrupt Eagle Picher Industries in 2000. They planned to use it as a base from which to service and build upon Lotus’s list of U.S.-based powertrain clients, and the facility — though in need of investment and upgrades — had plenty of room for expansion. (It briefly was considered as a potential facility for assembly of CKD (Completely Knocked Down) Elise vehicles, though this idea never progressed beyond the idea stage.)

Companies like Mahle, AVL and Ricardo took notice of the acquisition. In one fell swoop, Lotus had become a serious player in the powertrain test business in North America, acquiring a 70,000 ft2 facility with its own tank farm, conditioned water and air, and extensive dynamometer and test facilities capable of automotive, motorcycle, small engine, mileage accumulation and durability testing.

Though the company went through its ups and downs as the U.S. auto industry wobbled toward bankruptcy and reorganization and Lotus went through a revolving door of managing directors and business plans, employment stayed relatively steady at 60-70 people.

This number doubled in recent years when LEI conducted a production audit program for an American OEM’s four-cylinder engine. These extra hands were, as one might expect for a short-duration project, temporary hires who were gradually released as the program wound down.

Worryingly, just four months after LCU and LEI were consolidated in Ann Arbor in June of 2015, insiders began speaking out about cutbacks, imminent layoffs and a drop in consulting work. Some even suggested that the the building at 1254 Main St. in Ann Arbor was for sale, and that LEI would soon close. That has not happened, though employment at LEI dropped to fewer than 20 as layoffs begun in late 2016 continued.

Our sources insist Mahle, Southwest Research Institute and AVL toured the facility this week, with an eye to acquiring the property should it come on the market. Insiders say LEI is capable of profitably performing low- and mid-level development work its former competitors can’t, and which LEI used to do for them until the recent cancellation of these contracts.

Also, these companies have the financial strength to upgrade the facility, plant and equipment in ways Lotus never could.

The Virtual Driver