It turns out that GM isn't the bad guy that the president was painting them to be.
A snippet from the full history:
When asked in opening Q and A whether cost and profit were a factor, the President was very candid. He doesn’t like GM.
President: “It got to be a debate over cost. We don’t want to think too much about cost when we’re talking about this. This is not about cost. I WASN’T HAPPY WHERE GENERAL MOTORS BUILT PLANTS IN OTHER LOCATIONS (MEXICO) OVER THE YEARS. ….. AND SO I DIDN’T GO INTO IT WITH A VERY FAVORABLE VIEW. I WAS EXTREMELY UNHAPPY WITH LORDSTOWN OHIO. THEY LEFT LORDSTOWN IN THE MIDDLE OF AN AUTO BOOM (in fact, sales of sedans produced at Lordstown were crashing). BECAUSE WE HAD 17 CAR COMPANIES COMING IN (?) AND THEN THEY WERE LEAVING ONE PLANT IN OHIO. I LOVE OHIO "AND WHAT HAPPENS, THAT BECAME THE STORY.
"AND FRANKLY I THINK THAT WOULD BE A GOOD PLACE TO BUILD THE VENTILATORS. AND WE’LL SEE, WE’LL SEE WHAT HAPPENS.
"SO I WASN’T TOO THRILLED."
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Now, the whole story:
On Friday, the President insinuated General Motors was acting un-patriotically, and was attempting to profiteer from the shortage of life-sustaining ventilators. He invoked the Defense Production Act, ordering them to produce the ventilators. But GM was already far ahead of any other company in moving forward and had in fact made the commitment to produce the ventilators “at cost” with Ventec, a leading ventilator provider.
Here are the facts:
Wednesday 3/18: GM Chairperson Mary Barra reaches out to White House Chief Economic Advisor Larry Kudlow and offers GM’s manufacturing and engineering capacity to fulfill the need for medical supplies. (Source: Axios, GM and White House)
Friday 3/20 GM and Ventec, a ventilator manufacturer from the Seattle area, announce they are undertaking a feasibility project to determine whether they can jointly initiate rapidly expanded production. (GM and Ventec joint release)
By Monday 3/23 GM and Ventec not only prove feasibility, but designate GM’s former electronics facility in Kokomo, Ind. as the “clean” facility for production. The UAW is asked to begin recruiting volunteers. It’s a labor intensive project and may need as many as 1,000 workers. GM’s purchasing chief informs Barra he has commitments from nearly all the suppliers needed for 700 components. He is confident the remaining 37 components can be sourced. (GM, Axios and Reuters)
Tuesday 3/24 Axios and Reuters report GM’s incredible progress. Ventec is told to anticipate an announcement from the White House about the impending contract. Ventec is ready to go but has still not received direction from the feds on how many ventilators it is ordering, making cost quotes per unit more difficult to estimate.
Wednesday 3/25 Without explanation the White House cancels the announcement and Ventec is told there will be no contract. Late that evening Ventec and GM agree to move forward anyway. GM agrees to help clear Ventec’s 20,000 unit back-order at cost. Essentially they agree to build a decade’s worth of ventilators in less than 2 months.
Thursday 3/26. NYT reports White House balks because they are trying to decide between different vendors who they believe can offer lower cost options. Ventec and GM prepare to announce their formal production agreement on Friday.
Friday 3/27 President threatens in 2 tweets to invoke “P” (Defense Production Act) against GM. Suggests they should build ventilators at Lordstown, a plant the White House knows GM no longer owns. They are also aware a much more practical electronics plant was chosen for production. He also insults Mary Barra who made the initial offer with prompting from no one.
Within 90 minutes, Ventec and GM announce their plans for production. They have hired 1,000 workers, a full shift, and have the sourcing to make 200,000 ventilators. They have printed training manuals and intend to start training in the new work week. All of these plans and progress occur well before any implied or actual threat from President Trump.
Friday Evening: The President announces he is invoking the Defense Production Act. It will not get things built any faster, but does eliminate the red tape normally associated with government contracting.
His new procurement czar Peter Navarro suggests many “patriotic” companies had come forward, but they hit a roadblock with GM. The President says, “we won’t pay double or triple for ventilators.” Yet GM and Ventec were producing them at cost. Throughout the briefing it’s implied they had difficult discussions with GM. In fact, Ventec is the primary contractor and handled all interaction beyond Barra’s original offer. When asked in opening Q and A whether cost and profit were a factor, the President was very candid. He doesn’t like GM.
President: “It got to be a debate over cost. We don’t want to think too much about cost when we’re talking about this. This is not about cost. I WASN’T HAPPY WHERE GENERAL MOTORS BUILT PLANTS IN OTHER LOCATIONS (MEXICO) OVER THE YEARS. ….. AND SO I DIDN’T GO INTO IT WITH A VERY FAVORABLE VIEW. I WAS EXTREMELY UNHAPPY WITH LORDSTOWN OHIO. THEY LEFT LORDSTOWN IN THE MIDDLE OF AN AUTO BOOM (in fact, sales of sedans produced at Lordstown were crashing). BECAUSE WE HAD 17 CAR COMPANIES COMING IN (?) AND THEN THEY WERE LEAVING ONE PLANT IN OHIO. I LOVE OHIO AND WHAT HAPPENS, THAT BECAME THE STORY.
AND FRANKLY I THINK THAT WOULD BE A GOOD PLACE TO BUILD THE VENTILATORS. AND WE’LL SEE, WE’LL SEE WHAT HAPPENS.
SO I WASN’T TOO THRILLED.
“And then we thought we had a deal for 40,000 ventilators and then it became 6 and price became a big object. But Peter is getting involved… maybe they’ll change their tune.”
Sadly, the tune has always been the same. GM offered to help and in less than 10 days moved heaven and earth to find a location, hire a workforce, source a 700-part piece of technology, spec it out for suppliers and set employee training in motion. All of this to be delivered at cost, a cost that could have been pinned down better had the Government instructed how many they needed.
Maximum production for Ventec is 200 ventilators per month. GM was offering to build 100 times that many in a matter of a few months… needing less than a month for re-tooling and training. That is nothing short of incredible. Their thanks was a politically motivated shaming in a nationally televised White House briefing. GM was patriotic. GM was All-American. They will not profit. In fact, they may lose business because of the President’s diatribe. I wonder how many other companies are re-thinking their willingness to step up as a result.
But on Monday, GM will start making masks in Warren and begin training in Kokomo.
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