Automakers making ventilators: Is Trump overselling?

public health advisors Coronavirus, Trump, automakers, ventilatorsMIH83 / Pixabay

To ensure that medical staff doesn’t face a ventilator shortage in their fight against the coronavirus, President Donald Trump is resorting to wartime measures. The Trump administration has asked the private companies to help meet the demand of these potentially life-saving devices. Informing about the development on this front, on Sunday Trump tweeted that automakers – Ford, General Motors and Tesla – have been cleared to produce ventilators to meet the shortage amid the coronavirus outbreak.

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More ventilators needed to fight coronavirus

“Ford, General Motors and Tesla are being given the go ahead to make ventilators and other metal products, FAST! @fema Go for it auto execs, lets see how good you are?” Trump said in a tweet. It is not exactly clear what Trump meant by the words “given the go ahead.”

As per an Associated Press report, Trump at a briefing earlier this weekend, claimed that “these companies are making them right now.”

Ventilators are very important for the patients affected with COVID-19, which is a respiratory disease caused by coronavirus. This disease affects the lungs. Since there is no medical treatment for the disease yet, doctors use ventilators to help the infected patients breathe and fight the disease.

According to a report from the NYT, the U.S. has about 160,000 ventilators, while 12,700 more are in the National Strategic Supply. The American Hospital Association estimates that about 960,000 COVID-19 patients will require ventilators amid the outbreak.

New York requests help

Trump’s tweet on Sunday follows a request from NY Gov. Andrew Cuomo to nationalize the medical supply acquisition, rather than leaving it to the states. Cuomo argues that currently states are competing against each other for the supplies, resulting in higher prices and more pressure on the health care system.

Cuomo previously called on Trump to ask companies to manufacture medical supplies under the Defense Production Act. This act gives the federal government the power to force private companies to make needed items for national defense.

A point to note is that Trump issued orders last week to invoke the Defense Production Act. However, Pete Gaynor, FEMA Administrator, told "Meet the Press" on Sunday that the administration still hasn’t used it as the companies have volunteered.

How are automakers responding?

Though Trump’s Sunday tweet stressed that the automakers – Ford, General Motors and Tesla – would come up with the ventilators fast to help fight coronavirus, there are talks that Trump might be overselling again. Reports are that Trump might be inflating the claims as the three automakers last week have only expressed an interest in producing ventilators.

On Friday, Tesla CEO Elon Musk in a tweet said that they are “working on ventilators,” but did not share specific details about their plans. In a follow-up tweet on Saturday, Musk noted that they had a “long engineering discussion” with Medtronic, the medical technology company. Again the tweet was short on details.

Talking of General Motors and Ford, none of the two have given any hints that they are even close to production stage. General Motors, on Friday, did say that it is partnering with Ventec Life Systems, a ventilator manufacturer. GM’s effort is part of the StopTheSpread.org, which is a program calling for a coordinated effort of private companies to help in the fight against COVID-19.

GM said that it would assist with the logistics, purchasing and manufacturing, but gave no information if it would be making the ventilators in its factories, which are closed for now.

Separately, a Ford spokesperson recently told Automotive News that it had “preliminary discussions” with U.S. and UK government officials and is looking into the feasibility of making ventilators.

Further, Ford, which has also suspended factory production amid the outbreak, noted that it is in discussion with the Trump administration, but has not yet started.

“We’re looking at feasibility,” Ford spokesman said, according to ABC News. “It may be possible, but it’s not you go from Rangers (small pickups) one day to ventilators the next. We’re figuring out what is possible now.”

Automakers making ventilators: not an easy thing to do

Moreover, considering the authorities haven’t yet enforced the Defense Production Act, the automakers are under no pressure over the request from Trump of making ventilators amid the coronavirus outbreak. This, coupled with the fact that the ventilators are a complicated and time-consuming machine to manufacture, does seem to suggest that these machines aren’t coming anytime soon.

Eric Gjerde, CEO of Airon Corporation (a small ventilator company) told Wired that producing “ventilators is not a trivial process” and that it is “just too dangerous to be thrown into the hands of people who don’t know what they’re doing.”

Another thing that needs to be taken into account is, if automakers are in fact going to produce it, then they would have to reconfigure their existing infrastructure to manufacture a completely new product.

A professor at the University of Notre Dame, Kaitlin Wowak, who focuses on industrial supply chains, believes reconfiguring the factory depends largely on how similar the new product is to the company’s existing product line.

“It’s going to be a substantial pivot to start producing an entirely different item,” Wowak said, as per ABC News.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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