On Friday, after hinting that he may do so previously, President Trump invoked the Defense Production Act (DPA) compelling General Motors to make ventilators. This action is specific to General Motors, but confusingly comes several hours after that company announced plans to build ventilators at its Kokomo, Indiana, plant with partner Ventec Life Systems, which is a medical supplier of respiratory-care products.
Let’s back up and discuss what General Motors announced prior to the invocation of the DPA. First, after pointed criticism from President Trump on Twitter Friday morning, GM announced that the company would build ventilators at the Kokomo plant.
General Motors MUST immediately open their stupidly abandoned Lordstown plant in Ohio, or some other plant, and START MAKING VENTILATORS, NOW!!!!!! FORD, GET GOING ON VENTILATORS, FAST!!!!!! @GeneralMotors @Ford
— Donald J. Trump (@realDonaldTrump) March 27, 2020
The Kokomo plant produces electronic components and sensors for the company at its 2.6-million-square-foot facility. The Kokomo Tribune reports the company would deploy 1,000 workers for the ventilator production effort, including some employees from its Marion, Indiana, stamping plant.
GM committed to ramping up to 10,000 ventilators per month, with the first deliveries happening in April, although there’s no specific date at which the company expects to hit the 10,000 unit/month target. Per the same statement, GM also will produce surgical masks at its Warren, Michigan, factory. The company says production on these items will start next week, and ramp up to 50,000 units per day within two weeks. Eventually production could top 100,000 units per day.
Despite GM’s published plans, Trump went forward and signed the DPA later that day to require the company to produce ventilators. In a statement accompanying the act, the administration said:
Today, I signed a Presidential Memorandum directing the Secretary of Health and Human Services to use any and all authority available under the Defense Production Act to require General Motors to accept, perform, and prioritize Federal contracts for ventilators. Our negotiations with GM regarding its ability to supply ventilators have been productive, but our fight against the virus is too urgent to allow the give-and-take of the contracting process to continue to run its normal course. GM was wasting time. Today’s action will help ensure the quick production of ventilators that will save American lives.
In a statement provided to CNBC, a GM spokesperson said that the invocation wouldn’t change the company’s plans or schedule.
The DPA dates back to the era of the Korean War, and by using it the President can compel a company to alter normal production plans and schedules in order to produce vital goods during a major crisis. Prior to this announcement, the President and his advisors had been reluctant to invoke the law, arguing the threat is sufficient on its own to compel companies to act. In addition, the President and some of his advisors have hinted it would be unsavory to direct the market in this way. The President, specifically, compared invoking the DPA to Venezuela nationalizing certain companies, NPR reported two days ago.
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