When General Motors and Ventec LIfe Systems sought out capacity to build 200,000 ventilators, they turned to U.S. suppliers for the parts, as the coronavirus pandemic threatened global supply chains and made speed a key driver.
The lifesaving machines that help patients breathe are desperately needed by hospitals across the nation facing shortages. New York State's Governor Andrew Cuomo has said his state alone may need 30,000 or more to service patients suffering from covid-19.
On March 20th, the Precision Machined Products Association, which represents manufacturers of specialty parts, got a call asking who could make dozens of ventilator parts. The trade association immediately put the request out to members, sharing the specifications on a listserv. More than 70 firms replied within 24 hours with how they could provide their services.
Pindel Global Precision was one of the companies that answered the call. Pindel's 68 employees are already speeding up orders for ventilator parts for existing customers, but would take on more work if it comes through. CEO Bill Berrien says U.S. producers have been overlooked.
"I still think big manufacturers are stuck in the mindset that 'my supply chain is in Asia and I'm dead in the water' until they come back on line, said Pindel CEO Bill Berrien.
Berrien said he hasn't heard back on the GM order and would not expect to make money off of that contract. "We stand ready."
Still, he expects the global pandemic to speed up the shift that was already happening away from U.S. companies sourcing components from Asian countries. He sees increasing automation and artificial intelligence shifting the cost advantage back to the U.S.
"We've got a health-care crisis that's also a manufacturing crisis that's the mother of creative thinking and innovation," said Berrien.
Geneva, Illinois based Smith & Richardson also responded to the call from GM/Ventec. The company employs 53 in the U.S. and is already busy making ventilator parts for existing customers.
"We've been making these parts for years, albeit at much smaller volumes then we're currently making them," said Smith & Richardson CEO Richard Hoster.
He thinks the GM contract will be profitable if he gets it, but his company would be absorbing expedited shipping and overtime costs associated with getting the parts produced in a short time frame. "This is the right thing to do and it keeps team members working," he said.
Smith & Richardson also supplies the defense and commercial aerospace industry.
He thinks the shutdown and decreased global demand will offset any potential gains U.S. based companies might get from companies reconsidering outsourcing.
"Price is still the driving factor," said Hoster, noting that companies have already been considering the total cost of outsourcing, not just the cost of the product.
Smith & Richardson has an office in Taicang, China, to serve customers in Asia, Russia and Europe. The facility there was shut down in January as the coronavirus took hold and reopened about a month later. But it took another month to get back to 100% staffing, as employees had left the area and travel restrictions kept them from returning.
"We're busy, but we supply mostly companies in Asia, the general manager tells me that he's hearing from people who were exporting and now they're really slow because nothing's going anywhere," said Hoster.
President Donald Trump has been critical of GM, saying the company has been slow to gear up production. After initially hesitating, he invoked the Korean War-era Defense Production Act last Friday, a statute that can be used to force companies to make products for the government in times of crisis. GM expects the machines to start rolling out of its Kokomo, Ind., plant by end of April, according to the New York Times.
The president on Monday took a different tone, using the crisis to highlight U.S. manufacturing capabilities. He called the CEOs of Honeywell, Jockey, My Pillow, Procter & Gamble and United Technologies to the White House coronavirus task force briefing to highlight their efforts.
"I'd just like to emphasize one thing: The most innovative and safe products come from the private sector in partnership with government, taking an all-hands-on-deck approach," Trump told reporters in the Rose Garden.
He also discussed the government and private sector initiative to increase ventilator production, saying any not needed in the U.S. would go overseas. "We have now 10 companies, at least, making the ventilators. And we say, 'Go ahead.' Because, honestly, other countries really — they'll never be able to do it. It's a very complex piece of equipment and it's — it's big and expensive."