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Trump orders General Motors to make ventilators under Defense Production Act

Key Points
  • President Donald Trump has ordered General Motors to make ventilators under the Defense Production Act.
  • The Korean War-era statute can force certain American companies to produce materials that are in short supply in the face of the growing outbreak.
  • The order does not change GM's previously announced plans or schedule to produce the ventilators, according to the company.
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Trump orders GM to make ventilators under the Defense Production Act

President Donald Trump has ordered General Motors to make ventilators under the Defense Production Act hours after criticizing the company for not acting quickly enough to produce the devices amid the coronavirus pandemic. 

The Korean War-era statute can force certain American companies to produce materials that are in short supply in the face of the growing outbreak.

The order comes hours after GM announced plans to build critical-care ventilators with Ventec Life Systems at one of the automaker's component plants in Indiana. 

The order does not change General Motors' previously announced plans or schedule to produce the ventilators, according to GM spokesman Jim Cain. Earlier, the companies said they were expecting to begin shipping as early as next month.

Trump, in a statement from the White House, said the action "will help ensure the quick production of ventilators that will save American lives."

"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," he said.

GM, in an emailed statement, did not directly address Trump invoking the act. It reiterated that employees with Ventec, GM and their supply base "have been working around the clock for over a week to meet this urgent need."

"Our commitment to build Ventec's high-quality critical care ventilator, VOCSN, has never wavered," GM said. "The partnership between Ventec and GM combines global expertise in manufacturing quality and a joint commitment to safety to give medical professionals and patients access to life-saving technology as rapidly as possible. The entire GM team is proud to support this initiative."

General Motors and Ventec Life Systems are partnering to convert the GM Kokomo, Indiana ERC building for the production of Ventec ventilators in response to the COVID-19 pandemic.
GM

The announcement that Trump was implementing the DPA came less than a day after the president cast doubt on New York Gov. Andrew Cuomo's assertion that his state would need at least 30,000 ventilators to meet the predicted explosion in demand from COVID-19 patients in the coming weeks.

"I have a feeling that a lot of the numbers that are being said in some areas are just bigger than they're going to be," Trump said in an interview with Fox News host Sean Hannity. "I don't believe you need 40,000 or 30,000 ventilators. You know, you go into major hospitals sometimes they'll have two ventilators. And now all of a sudden they're saying, 'Can we order 30,000 ventilators?'"

Before GM's announcement, Trump criticized the automaker and its CEO, Mary Barra, on Friday for their response to producing lifesaving ventilators amid the coronavirus pandemic and allegedly wanting "top dollar" for doing so. In a tweet, he referenced invoking the Defense Production Act, however did not provide details. 

Earlier Friday, The New York Times reported that GM and Ventec, with which it is partnering to build such supplies, wanted more than $1 billion, including hundreds of millions upfront to GM to retool a car parts plant in Kokomo, Indiana, to make the ventilators.

GM said it is donating its resources to produce the ventilators, known as VOCSN, at cost.

While the White House said its decision to implement the DPA reflected a need to ramp up production, in singling out GM, the president may have also been channeling some of the frustration he has expressed in the past toward the company.

Specifically, Trump views GM's decision to shutter an auto plant in Lordstown, Ohio, last year as a personal insult. Trump had publicly pressured the company and Barra to keep the plant open. 

Trump had also promised his political supporters in Ohio that their manufacturing jobs would be coming back, a promise he could not keep. 

"I want jobs to stay in the U.S.A. and want Lordstown (Ohio), in one of the best economies in our history, opened or sold to a company who will open it up fast!" Trump tweeted in March of last year, shortly before the GM plant closed.

He even called Barra personally to press her not to close the plant, to no avail. 

"Just spoke to Mary Barra, CEO of General Motors about the Lordstown Ohio plant, I am not happy that it is closed when everything else in our Country is BOOMING," Trump said in another tweet that month. "I asked her to sell it or do something quickly. She blamed the UAW Union — I don't care, I just want it open!"

Ohio is a crucial state for Trump's reelection prospects in November, and he is no doubt aware of the promises he made to workers there, telling them their jobs would come back, and advising them not to sell their houses.

Shares of GM were up more than 3% in after-hours trading Friday. The stock closed down 5.2% in regular trading.

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