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Switching gears: Inside GM’s four-week sprint to build emergency ventilators

Newly revealed details show that GM has been continuously engaged in the effort – order or no order – and company officials say the sprint from first phone call to production will take about a month. A parallel effort by Ford isn’t expected to bear fruit until June, though the company has said it’s speeding up its work. Trump did an about-face on Sunday (US time), saying GM is doing a “fantastic job.”

Even as Trump was excoriating GM on Friday, the automaker and its Seattle-area partner, Ventec Life Systems, were closing in on a production date to build a machine called a VOCSN: ventilator, oxygen, cough, suction and nebuliser. When they start in mid-April, it will culminate a lightning-fast effort to convert an auto-parts plant into a medical-equipment complex.

“The speed has been challenging,” Gerald Johnson, GM’s global vice president of manufacturing, said in a Sunday evening interview. “But we know it will save thousands of lives. Making cars is cool, but it doesn’t compare to what we’re doing.”

Trump’s criticism of GM boiled down to the company asking the federal government to “show me the the money” before it would put the venture into high gear, according to White House trade adviser Peter Navarro. In initial discussions with the administration, GM and its partner were seeking about $US250 million ($407 million) for Ventec and its components suppliers to get production moving. The government wanted to contribute a fraction of that, people familiar with the deliberations said.

“You can’t get to the finish line unless you first go to the starting gate,” Navarro, who was appointed last week to coordinate actions under the Defence Production Act, said in an email to Bloomberg News.

Stop the spread

The sprint started with exploratory phone calls on March 17 from an ad hoc group of business leaders called Stop the Spread. It was seeking ways to make up for what some members saw as a slow federal response to COVID-19. The group is led by retired American Express chairman Ken Chenault and Rachel Carlson, founder of online education firm Guild Education.

GM's experience with mass production is coming in handy as it ramps up ventilator production plans.

GM’s experience with mass production is coming in handy as it ramps up ventilator production plans.Credit:Bloomberg

They asked Barra’s team what they needed to make ventilators. GM needed a ventilator-making partner with an established product and a medical sales force.

For his part, Ventec CEO Chris Kiple said that he needed a partner with mass-manufacturing expertise, factories and a workforce to produce on a huge scale to help cities like New York as patients overwhelm hospitals.

Exponential growth

Managers from both companies got on the phone that evening and started exploring how GM could help Ventec go from building a maximum of 250 ventilators a month to 10,000 and eventually get on pace to make 200,000 this year. The whole industry generally makes fewer than 100,000 a year. It was growth meant to match the exponential spread of a disease that has sickened at least 125,000 Americans and killed more than 2100 in the epidemic’s early weeks.

“They produce millions of cars a year in the US,” Ventec Chief Strategy Officer Chris Brooks said of GM. “We produce hundreds of ventilators a month. They have a global supply base that understands making parts at large scale.”

The next day, Barra told Kudlow that GM could pitch in. Kudlow, one of the administration’s primary pitchmen, floated the idea on television. He cited GM as an example of a company that was stepping up “on a voluntary basis for civic and patriotic reasons.”

But GM was still studying how to make it happen. On March 19, Phil Kinley, vice president of manufacturing and labor and the plant-floor leader of the project, flew with engineers to Ventec’s site in Washington, Johnson said. Ventec sent technical specifications and drawings for the ventilator’s 700 parts to GM’s Tech Center in Warren, north of Detroit.

GM’s purchasing team went to work, Johnson said. They contacted suppliers who make the small motors that run everything from automatic windows to wipers. They called wiring producers and companies that make tubes and hoses. By March 22, GM had most parts lined up.

“The supply base really stepped up,” Johnson said.

Painstaking assembly

The VOCSN, approved by the Food and Drug Administration in 2017, is primarily used for critical-care ventilation. It also delivers concentrated oxygen to the patient, and has a nebuliser that sends medication to the lungs, secretion management that creates an artificial cough and a suction device to keep the patient’s chest clear.

The company boasts on its website that the 18-pound (8.2 kilograms) unit replaces 55 pounds (25 kilograms) of equipment. To make something slightly larger than a toaster oven, a GM assembly plant was ill suited. The assembly lines are made to swing a dashboard into the cabin of a Buick. Making a ventilator is more like building a watch: Assemblers work by hand at stations with tables and chairs.

That sort of operation is now being created in a GM parts plant in Kokomo, Indiana. It has a clean room and 100,000 square feet that will contain two assembly lines.

The facility has 300 on staff and will need 1000 to achieve the production levels GM and Ventec want to reach. The carmaker has started evaluating new hires and is seeking volunteers among the staff idled by the shutdown of parts production in Kokomo and metal stamping in nearby Marion, Indiana.

GM and Ventec engineers are disassembling a VOCSN unit and reassembling it as they lay out the factory and the process, Johnson said.

“This is truly a major step at a critical moment,” said Harley Shaiken, a professor of labor economics at the University of California at Berkeley and longtime watcher of Detroit’s automakers. “GM was written off and appears to be coming through.”

Donald Trump heavily criticised GM last week before changing tack.

Donald Trump heavily criticised GM last week before changing tack.Credit:AP

Money matters

GM and Ventec now need to decide how the units will be distributed and paid for. Negotiations continue with the government, which would likely buy and channel them through the Federal Emergency Management Agency, according to people familiar with the matter.

That assumes a deal gets done. To the surprise of GM and Ventec, Trump accused the automaker of trying to gouge the government during his Friday press briefing. He tweeted that GM officials “want top dollar.”

GM said it’s building the units at cost and is only the contract manufacturer for Ventec, which is the major player in negotiations with the government. The machines normally cost about $US18,000 apiece, while some ventilators can run as high as $US50,000.

Another benefit of Ventec’s VOCSN is it replaces four other pieces of hardware typically needed for acute respiratory care. Using it could lower costs for hospitals because they won’t need to buy oxygenators, nebulisers and devices to clear the lungs.

When Trump complained last week about pricing, people in the GM-Ventec venture thought that the device’s five-in-one therapy capabilities may not have been completely understood. People familiar with negotiations said there never was a firm proposal on volume or a timeline, and they were caught off guard when the president complained.

As negotiations go on, GM and Ventec say they are progressing fast. “The responsible thing for us to do is move forward and meet that need,” Brooks said.

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There’s already been a change in sentiment from Trump. At his press briefing on Sunday, he said, “I don’t think we have to worry about General Motors now.”

Bloomberg

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