Kurt Miller prepares machines for shipment at Ventec in Bothell on March 18. (Greg Gilbert/The Seattle Times/TNS, file)

Kurt Miller prepares machines for shipment at Ventec in Bothell on March 18. (Greg Gilbert/The Seattle Times/TNS, file)

Trump uses wartime act but GM, Ventec are already moving fast

The carmaker is working with the Bothell company to produce up to 10,000 ventilators per month.

By Tom Krisher / Associated Press

DETROIT — 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 Defense Production Act, which gives the government broad authority to direct companies to meet national defense 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.

“That is lightning-fast speed to secure suppliers, learn how the products work, and make space in their manufacturing plant. You can’t get much faster than that,” said Kaitlin Wowak, a professor at the University of Notre Dame who focuses on industrial supply chains.

GM expects to start making ventilators in mid-April, ramping up to a rate of 10,000 per month at as quickly as it can. The company is working with Ventec Life Systems, which makes small portable ventilators in Bothell, 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.

It was only a few days earlier that Trump had been holding up GM and Ford as examples of companies voluntarily responding to the outbreak without the need for him to invoke the act. Then on Friday, he slammed GM on Twitter and during his daily briefing for foot-dragging. On Sunday, he was back to praising the company during another briefing: “General Motors is doing a fantastic job. I don’t think we have to worry about them anymore.”

But GM says it had been proceeding on the same course all along.

The company got into the ventilator business on March 18 after being approached by stopthespread.org, a coalition of CEOs trying to organize companies to respond to the COVID-19 disease that has already claimed more than 30,000 lives globally. The organization introduced GM to Ventec.

The automaker pulled together manufacturing experts, engineers and purchasing specialists, and the next day had people at Ventec’s facility, a short distance from a nursing home where the virus killed at least 35 people.

They worked on speeding up Ventec’s manufacturing. A few days later, GM assigned more engineers and purchasing experts to figure out how it could make Ventec’s machines. Some Ventec parts makers couldn’t produce enough widgets fast enough, so GM went to its own parts bin to find suppliers to do the job, Johnson said. At the same time, GM was shutting down its car and truck factories temporarily due to worker fears about the virus.

Erik Gordon, a University of Michigan law and business professor, said he thought Trump would commend GM and use it as an example for other manufacturers in the coronavirus fight.

“What came out was a smack on the head,” he said.

Gordon, who teaches a class in commercialization of biomedical goods, said Trump likely will claim credit when GM starts making the machines. “This is an election year, and on all sides you’re going to see political theater,” he said.

Critics have urged Trump to invoke the Defense Production Act broadly to control the production, supply and distribution of ventilators and protective gear for hospital workers who are running short. That’s what the act was meant to do, and it was not for use against a single company, Gordon said.

Even with increased production from all ventilator makers, however, the U.S. might not have enough of the life-saving machines. U.S. hospitals have about 65,000 of the ventilators that are sophisticated enough to treat critical coronavirus patients. It could probably cobble together a total of 170,000, including simpler devices, to help with the crisis, one expert says.

A doctor at the University of Nebraska Medical Center estimates that 960,000 people in the U.S. will need to be on ventilators, which feed oxygen into the lungs of patients with severe respiratory problems through a tube inserted down the throat. Doctors hope social distancing will stop a huge number of people from getting sick simultaneously, flattening the curve of the illness so they can use one ventilator to treat multiple patients.

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.

Ventec, which is negotiating with the government to provide more ventilators, said it only changed numbers and prices at the request of government agencies, which asked for a range of quantities and prices. The company said it’s selling the ventilators, which can treat severe virus patients, at distributor cost, and it has offered scaled down versions for a lower price.

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 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.

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.

“We’re still moving full speed ahead,” Kiple said. “We know there’s a shortage of ventilators.”

————

This story has been corrected to show that that GM intends to start production in mid-April but will not reach a rate of 10,000 per month until later.

Talk to us

More in Herald Business Journal

Funko plans to lay off 25% of its global workforce

The Everett-based pop culture toy maker employs hundreds at its Everett headquarters and warehouse.

Contractor getting $5M bonus for Hanford vitrification plant

The project will turn radioactive waste into a stable glass form for disposal.

SpaceX captures the flag, beating Boeing in cosmic contest

Elon Musk’s company is the first private firm to launch a crew to the International Space Station.

County staff urges ‘no’ on Point Wells development proposal

County Hearing Examiner Peter Camp could decide the fate of the high-rise project this summer.

Alderwood mall is ready for the governor’s green light

The Lynnwood shopping center, closed since March 24, could reopen in June. But expect changes.

Snohomish County seeks to enter second phase of reopening

The variance request will go to the state if approved by the Board of Health and the County Council.

Firm accused of violating eviction ban agrees to restitution

About 1,450 tenants, including some in Marysville, will receive rent refunds or direct payments.

Texan comes to defend Snohomish outlaw barber cutting hair

Bob Martin is defying orders to close. The man he calls his attorney didn’t go to law school.

Hundreds of masked guests line up as Tulalip casinos reopen

Tulalip Resort Casino and Quil Ceda Creek opened the doors on Tuesday after a two-month closure.

Boeing workers cope with the virus threat as layoffs loom

Five weeks after they returned to work, Boeing workers say measures inside the plants are mostly working.

Boeing cutting more than 12,000 jobs with layoffs, buyouts

The company said it will lay off 6,770 workers this week, and another 5,520 are taking buyouts.

Worst jobless rate in the state: Snohomish County at 20.2%

In April, 91,383 were unemployed in the county. The aerospace sector was hit especially hard.