WASHINGTON (CN) — President Donald Trump on Friday used the Defense Production Act to make General Motors begin mass production of ventilators that hospitals across the U.S. need to treat patients infected with the novel coronavirus.
In an executive order issued Friday afternoon, Trump directed Health and Human Services Secretary Alex Azar to use “any and all authority available” under the 1950 law to require the auto giant to “accept, perform and prioritize federal contracts” for ventilators.
First passed by Congress during the Korean War to mobilize the nation’s infrastructure and manufacturing abilities during a time of crisis — amended after the formation of the Department of Homeland Security and used only a handful of times in modern history — the Defense Production Act allows the president to delegate federal department heads like Azar to prioritize contracts, direct companies to reserve services, supplies or materials in anticipation of a coming order, or take other specific actions to maximize output.
The president’s decision comes on the heels of reporting by The New York Times earlier this week that suggested talks between the Trump administration and General Motors went sour after the White House objected to the proposed initial cost for ventilators.
On Friday, during a White House coronavirus task force briefing, Trump described his decision to enforce the legislation with GM as a result of his unhappiness with the company’s closure of a plant in Lordstown, Ohio, and the price becoming unwieldy.
“We were just not getting there, we were getting there with a lot of other companies, but we have to get these people on board. … We don’t want to get ripped off on price,” Trump said. “They were not talking the right way at the beginning.”
Trump also announced the appointment of Peter Navarro, his current economic assistant, as National Defense Production Act policy coordinator.
Navarro has publicly pushed back against implementing the act in recent days and only 24 hours ago, appeared on CNN saying that the media was overhyping the need for protective equipment and rushing calls to enforce the legislation.
“We have a wartime president fighting an invisible enemy, and we have the full force of government coupled with the private enterprise,” Navarro said. “We need industrial mobilization to make adequate ventilators particularly in the very short run … and as the virus bears down.”
Trump officially invoked the legislation on March 18 through executive order. That order was meant to prioritize and allocate “health and medical resources” to respond to the worsening outbreak and increasing pressure on hospitals, but Trump backpedaled four days later when he appeared at a White House coronavirus task force briefing.
To invoke the law is one thing, but to actually use it is another. As recently as last week, Trump called activation unnecessary. Manufacturing powerhouses like 3M, Honeywell, General Electric and others were volunteering their efforts and facilities to make the ventilators, the president said.
He also suggested using the Defense Production Act was “socialist” in theory and, if implemented, would mean the U.S. government would run risk of “nationalizing our businesses.” But the black letter of the law suggests nothing of the sort.
Nationalization occurs when a government completely takes over a company or industry with zero compensation. Under the 1950 law, companies are given incentives to produce, can take on loans and can even be shielded from antitrust regulations that may otherwise slow their ability to produce the supply for the demand.
In a statement ahead of the White House announcement, GM and manufacturer Ventec issued said they have been working continuously to meet the need for ventilators and anticipate being able to deliver the first batch next month.
GM also said it expects it will be able to “ramp up to a manufacturing capacity of more than 10,000 critical care ventilators per month with the infrastructure and capability to scale further.”
Specifics, like exactly when the first ventilators would be delivered or where they are going, are still unclear.
Trump said the decision to invoke the Defense Production Act came before GM made its announcement. A representative from GM did not immediately return a request for comment.
Surgical masks approved by the Food and Drug Administration will also be produced en masse at a GM facility in Warren, Michigan, beginning next week. Within two weeks, the company said it expects to produce 50,000 masks per day with potential to increase to 100,000 per day.
Boeing has offered face shields for medical professionals, Trump said Friday. The company will also permit the federal government to use three cargo planes to deliver supplies around the U.S.
Under another executive order issued Friday, Trump also instructed the Department of Defense and Department of Homeland Security to call up components of the U.S. armed forces ready reserve to mobilize medical and disaster response personnel.