Trump's coronavirus pressure on GM seems to be working
In just four days, General Motors fast-tracked a plan to help a stretched medical device company build 200,000 badly needed ventilators to treat coronavirus patients.
Why it matters: It's not only a symbol of GM's significant industrial might 11 years after a government-brokered bankruptcy. It also shows how President Trump is squeezing American businesses to act.
- Instead of invoking the Defense Production Act to marshal private resources for the federal government, Trump has been pushing the nation’s biggest manufacturers to come up with enterprising solutions on their own.
What's happening: GM worked "around the clock" over the weekend to secure suppliers for the parts needed to help Ventec Life Systems dramatically boost ventilator output, the automaker said Monday.
- GM is even studying the feasibility of building Ventec ventilators at its Kokomo, Indiana, plant, which made vehicle electronics until last week, when the automaker suspended North American production due to the outbreak.
- UAW workers have been notified of the potential restart, and an announcement could come Tuesday, said people familiar with the plans.
- The goal of the partnership is to build up to 200,000 ventilators, Reuters reported.
Yes, but: A company can't build a car — or a ventilator — unless it has all the parts.
- GM has lined up suppliers for 95% of the necessary components and is seeking to source the remaining 37 parts, according to an email to suppliers from Shilpan Amin, GM's vice president of global purchasing, per Reuters.
- Production could start within a week, suppliers told Crain's Detroit Business.
- "We're off and running. The tool shops are designing tools right now," Eric Showalter, CEO of Myotek North America, told Crain's. "We're able to at least start to kick off tools in China to build these things. If we get paid, we get paid. We're all just trying to help where we can."
Flashback: CEO Mary Barra offered GM's help in a phone call with White House Economic Advisor Larry Kudlow on March 18.
- By Friday, GM's top manufacturing brass was visiting Ventec's manufacturing facility in suburban Seattle to learn what was needed.
- On Sunday afternoon, Trump tweeted: "Ford, General Motors and Tesla are being given the go ahead to make ventilators and other metal products, FAST!"
- By Sunday evening, Amin informed Barra that GM and Ventec had secured supplier commitments for nearly all of the 600-plus parts needed to produce Ventec's innovative multi-function ventilators.
- Early Monday, the FDA temporarily relaxed certain policy guidelines, a critical step to allow manufacturers to rapidly expand production.
Between the lines: Trump publicly pushed GM to move heroically, but if the effort fails, it will be GM left facing the fallout.
The bottom line: It would be a monumental feat if GM pulls it off in less than a week. "We know that time is not on our side," said GM spokesman Dan Flores.