The Department of Health and Human Services declared that General Motors will be given $489.4 million to produce 30,000 ventilators for the Strategic National Stockpile in accordance with federal deadlines. The project is being completed at cost. In other words, GM doesn’t stand to make a penny as it moves heaven and earth to manufacture Ventec ventilators as fast as it can. However, suppliers participating in the program are likely to profit during this emergency.
The first 6,000 or so ventilators are to be delivered by June 1, with the rest of the order to be filled before the end of August. The White House has put out a call for 100,000 ventilator-order across its contractors by that August deadline. At the same time, hot spot states such as Michigan and Louisiana have begun to reach their estimated peaks of daily new cases. How this will effect demand come June is hard to determine at this time.
The General Motors Kokomo Operations facility in Indiana is returning to action early next week, as the company begins production on their first contracted order of ventilators. As demand for the life saving piece of medical equipment continues to rise amid the coronavirus pandemic, the federal government has invoked the Defense Production Act from the days of the Korean War to order the automaker to get involved.
According to CNBC, the announcement comes after President Trump condemned both GM and its CEO Mary Barra for not executing ventilator-related plans in a timely fashion. Prior to the executive order, the automaker was already working with Ventec Life Systems to produce the ventilators at the necessary scale, and has been operating on an accelerated timeline to complete the project. However, things do not happen overnight.
At the same time, GM is building and shipping “level 1” face masks out of a previously mothballed facility in Warren, Michigan. The company has also shared its manufacturing plans with GM suppliers along with the Original Equipment Suppliers Association and the Michigan Manufacturers Association to help other manufacturers ramp up their own production efforts.
GM isn’t the only automaker getting involved with ventilator production however, as Ford has partnered with the Florida-based Airon Corp to produce 50,000 ventilators by July 4. Ford will be constructing the medical equipment at its Rawsonville Components Plant in Ypsilanti, Michigan.
While we haven’t seen automakers take on the call of a national crisis like this since the Arsenal of Democracy protected the free world, a main concern now is that it is too little too late. With states like New York and Michigan expected to reach their peak case numbers in the coming week, the additional ventilators are far from ready at this time. Regardless if they have a choice in the matter or not, good on the automakers for stepping up and taking the call to action.