President Donald Trump signed a presidential directive on Friday instructing GM to manufacture ventilators and prioritize federal contracts just hours after the automaker announced plans to manufacture critical medical equipment for patients with COVID-19 by the corona virus disease caused.
The Defense Production Act order marks a sudden reversal by Trump, who has touted GM and other manufacturers' efforts to boost the production of respirators and personal protective equipment that are in short supply in the course of the COVID-19 cases. The order came in dispute with GM over a ventilator manufacturing contract.
GM and its partner Ventec Life Systems had already announced plans to produce the ventilators “at cost price” despite the lack of federal contracts. The arrangement would force GM to prioritize federal contracts, which would prevent the automaker from selling to states, or at least make it more difficult.
“Our negotiations with GM on the ability to supply ventilators have been productive, but our fight against the virus is too pressing to continue giving and taking the contract process to continue its normal course. GM wasted time. Today's measures will help ensure the rapid production of ventilators that save American lives, ”Trump said in a statement.
GM responded to Trump's order on Friday afternoon, noting that it had been working "around the clock" with Ventec and its supply base "to meet this urgent need."
"Our commitment to building Ventec's high quality ventilator, VOCSN, has never waned," the GM statement continues. “The partnership between Ventec and GM combines global manufacturing quality expertise and a shared commitment to safety to give medical professionals and patients access to life-saving technology as quickly as possible. The entire GM team is proud to support this initiative. "
GM had announced on Friday that it would produce Ventec Life Systems fans, even though an order from the federal government was pending. The companies announced on Friday that the fans would be manufactured at GM's engine plant in Kokomo, Indiana, with approximately 1,000 employees.
The announcement by GM and Ventec followed sharp criticism from Trump over several tweets that GM and his CEO and chairwoman Mary Barra blew up on Twitter. They accused the company of failing to meet its promised capacity and called for "top dollar," a term that seems to imply that the automaker was trying to benefit from the contract.
GM, a contract supplier to Ventec, has stated that it "donates its resources at cost." This means that it will not benefit from selling the masks and ventilators it makes. Whether the federal government would sign an order with the companies was an ongoing question that, according to sources, looked less certain as the talks progressed.
According to GM, efforts are already being made to set up tools and manufacturing capacities in the factory to manufacture Ventec's VOCSN intensive care ventilator. The automaker said production would begin in the next seven to 14 days. Deliveries of FDA-approved ventilators are scheduled to begin in April. Ventec is also attempting to ramp up production at its Bothell, Washington facility.
Regardless, GM also said it will begin producing Level 1 surgical masks at its manufacturing facility in Warren, Michigan, next week. The automaker expects to increase its mask production capacity to 50,000 masks a day within the next two weeks, with the potential to rise to 100,000 a day.
As usual with "this" General Motors, Things just never seem to work. They said they would give us 40,000 much needed ventilators "very quickly". Now they are saying that by the end of April it will only be 6,000 and they want top dollars. Always a mess with Mary B. Call "P".
– Donald J. Trump (@realDonaldTrump) March 27, 2020
Trump's tweets came after the New York Times reported that U.S. government officials had canceled a planned announcement detailing the GM and Ventec deal to manufacture up to 80,000 ventilators for the Federal Emergency Management Agency. The announcement, which was due to take place on Wednesday, was canceled after FEMA rejected the price of more than $ 1 billion.
theinformationsuperhighway has independently confirmed that the federal government has canceled the announcement due to reservations about the cost. According to a source from GM, FEMA and the White House trade advisor Peter Navarro had declined the costs.
Trump's tweets, which attack Barra and GM and urge the automaker to start production at an Ohio plant that the automaker no longer owns, are in stark contrast to the public comments the president made earlier this week when he released the Business mobilization efforts have announced their resources to alleviate a lack of medical supplies such as face masks and respirators.
Trump has repeatedly stated that he does not need to use the Defense Production Act to force companies to help make the necessary supplies. But that changed on Friday when he said he would use it to order the GM ventilator.
The cost of ventilators
As COVID-19 spread and health and government officials became increasingly concerned about the lack of ventilators and personal protective equipment, a number of manufacturers announced plans to increase production capacity or donate existing supplies. GM belonged to this group.
On March 20, GM and Ventec announced plans to increase the production of respiratory care products. This partnership emerged from StopTheSpread.org, a coordinated effort by private companies to respond to COVID-19.
Before this announcement was made, GM was investigating the feasibility of sourcing the more than 700 components required to build up to 200,000 Ventecs intensive care ventilators called VOCSN. Ventec describes these VOCSN devices as multi-function fans that were approved by the FDA in 2017.
GM identified the Indiana plant as a likely location and decided that, according to the source, a new clean room inside the factory had to be built that was large enough to produce the fans. GM estimated that it would cost around $ 750 million. This price included retrofitting part of the engine plant, buying materials to manufacture the fans, and paying the 1,000 workers needed to increase production, the source said. The remaining estimated cost of $ 250,000 was from Ventec.
GM estimated that production could be ramped up in time to deliver the ventilators by mid-April. During this time, states are expected to struggle with an increase in COVID-19 cases. The companies are ready to deliver the first ventilators next month and to achieve a capacity of more than 10,000 intensive care ventilators per month with the infrastructure and the ability to further scale.