Cleveland, Ohio – General Motors and the U.S. Department of Health and Human Services (HHS) agreed to a $489.4 million contract for the automaker to supply 30,000 ventilators to the government by the end of August with more than 6,000 due by the end of June.
That works out to a $16,300-per-ventilator sticker price, a discount to the $16,800 that distributor Trace Medical charged the Department of Veteran Affairs (PDF) for the same devices a year ago. President Donald Trump had complained that GM was dragging its feet on signing a deal and demanding unreasonable payment. Automaker officials said the company planned to produce the medical devices at cost.
HHS Secretary Alex Azar said, “Invoking the Defense Production Act to secure ventilator production from GM and other companies is a part of President Trump’s all-of-America approach to combating the coronavirus.”
The DPA allows the government to order companies to produce emergency equipment and makes the federal government the main purchaser, simplifying the procurement issues for states. Before using the act, several governors complained that they were competing against each other to secure needed medical equipment.
“The Trump Administration has deployed thousands of ventilators from the Strategic National Stockpile that have helped save lives in hotspots such as New York so far,” Azar added. “We’re grateful to the GM team for working with the federal government to expand our nation’s supply of ventilators as the pandemic evolves.”
GM is effectively working as a contract manufacturer for Washington-based Ventec Life Systems, the developer and manufacturer of the VOCSN ventilator. GM initially sent engineers to Seattle to study the system and see how it could use its supply chain and purchasing power to secure more components for the devices. That arrangement led to GM retooling an electronic components plant in Kokomo, Indiana, to build ventilators.
“GM and Ventec Life Systems are working with speed and urgency to arm front-line medical professionals with the critical care ventilators they need to treat seriously ill patients,” company officials said. “GM is proud to deploy its purchasing and manufacturing capability alongside the respiratory care expertise of Ventec.”
In addition to GM, Ford and Tesla are also working on ventilators. Ford plans to go into production in less than two weeks on a smaller device designed by Florida-based Airon. GE Healthcare licensed Airon’s ventilator and is working with Ford as the contract manufacturer of the device.
Today’s Motor Vehicles and its sister publication Today’s Medical Developments will host a webinar soon after the Ford ventilators go into production, detailing how that deal came together and how engineers took a manufacturability assessment process that typically takes months and completed it in days. To register for the free webinar, click here.
About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and Today's eMobility and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 20 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.