Trump uses wartime act but GM says it’s already moving fast

Twelve days ago, General Motors put hundreds of workers on an urgent project to build breathing machines as hospitals and governors pleaded for more in response to the coronavirus pandemic. But President Donald Trump, claiming the company wasn’t moving fast enough, on Friday invoked the Defence Production Act, which gives the government broad authority to direct companies to meet national defence needs.

Experts on managing factory production say GM is already making an extraordinary effort for a company that normally isn’t in the business of producing ventilators.

GM expects to produce ventilators at a rate of 10,000 per month starting in mid-April. The company is working with Ventec Life Systems, a small Seattle-area ventilator maker, and both say the Defense Production Act of 1950 doesn’t change what they’re doing because they’re already moving as fast as they can, fronting millions in capital with an uncertain return.

“I don’t think anybody could have done it faster,” said Gerald Johnson, GM’s global manufacturing chief.

Peter Navarro, Trump’s assistant for manufacturing policy, said Saturday that invoking the act was needed because GM “dragged its heels for days” in committing to the investments to start making ventilators at an automotive electronics plant in Kokomo, Indiana.

“No later than mid-April we expect to be up and running ventilators,” Gerald Johnson, GM’s global manufacturing chief said, noting the ventilators will need US regulatory approval, significant testing and that the company must train over 1,000 workers to assemble them.

Trump, in several appearances Friday, accused GM of promising 40,000 ventilators, then reducing the number to 6,000. He also said the company wanted higher prices than previously discussed.

Up until late Sunday, Ventec and GM hadn’t known how many ventilators the government would buy but those details are now being worked out. Ventec will need government money to help pay parts suppliers and ramp up its own production from 200 per month to 1,000 or more, said CEO Chris Kiple.Invoking the Defense Production Act “shined a light” on the need for ventilators, he said, but Ventec can’t move any quicker. Ventec isn’t sure if it will make any money on the devices, which generally sell for $18,000 - far less than ventilators used in hospital intensive care units that can cost $50,000. Johnson says GM has no intention of making a profit.

More on this subject: Coronavirus

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