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New York Times Explains Foolishness of Trump’s General Motors Nationalization

Last Friday, President Trump nationalized General Motors, ordering the automaker to produce as many ventilators as Health and Human Services Secretary Alex Azar says is necessary to address the coronavirus crisis. CEI blasted the move then, noting:

The Trump administration lacks an understanding of what automotive manufacturers produce or how they interact with their suppliers. Earlier today, President Trump indicated he did not know who owned the former GM Lordstown Complex.

Many suppliers are also far better positioned than automotive original equipment manufacturers like GM to produce equipment such as ventilators. We strongly urge President Trump to reverse this dangerous and ill-considered decision and allow markets to continue to respond to this emergency.

This morning, The New York Times published a story highlighting the real-world problems with President Trump’s bizarre invocation of the Defense Production Act against GM. A few facts stood out:

  • GM, as an emergency contract manufacturer for Ventec Life Systems, is likely still weeks away from mass production of ventilators at its still-being-retooled Kokomo, Indiana, semiconductor plant.
  • Prior to the crisis, Ventec was producing approximately 200 ventilators per month. It hopes to harness its existing facilities to increase monthly output to 1,000 ventilators.
  • Ventec and GM believe once new production capacity comes online, their partnership will be able to increase monthly output to 20,000 ventilators.
  • Ventec, not GM, has led all negotiations with federal authorities on ventilator production and distribution, namely with those at the Federal Emergency Management Agency and Department of Health and Human Services.
  • With GM’s help, Ventec hopes to produce and ship several thousand ventilators at the end of April, the soonest it can likely deliver anything produced at the retooled Kokomo GM plant.

President Trump’s order applies only to GM, a brand new temporary contractor of Ventec and a company with no experience manufacturing medical devices. Even those politicians who were calling on the president to invoke the Defense Production Act must be scratching their heads.

The truth is President Trump’s invocation of the Defense Production Act against GM will not produce more ventilators more rapidly than the plans already put in place by Ventec, GM, and their suppliers. Bluster from the White House doesn’t magically retool factories and retrain workers. Worse, meddling from administration bureaucrats far outside their depth may depress and delay production. To mitigate the risks associated with government incompetence, President Trump should immediately reverse his counterproductive order and allow the voluntary partnerships from Ventec, GM, and others in the private sector the opportunity to bear fruit.