The current CEO of General Motors (G.M.) is no William Knudsen. When called upon by President Roosevelt to coordinate the re-tooling of the auto industry to World War II production of massive amounts of armaments, “Big Bill” Knudsen – CEO of G.M. from 1937-1940 – rose to the occasion. The current CEO, well, not so much. Consequently, President Trump implemented the Defense Production Act (DPA) to compel G.M. to produce critically needed ventilators. Trump announced: “Today, I signed a Presidential Memorandum directing the Secretary of Health and Human Services to use any and all authority available under the Defense Production Act to require General Motors to accept, perform, and prioritize Federal contracts for ventilators.”
As the president explained from the Oval Office, the administration was in negotiations with G.M. for 40,000 ventilators the auto manufacturer said it could produce through its subsidiary Ventech Life Systems in Kokomo, Indiana. G.M. has since walked back the 40 thousand number and now thinks it can provide only between 5000 and 7,500 ventilators at a higher cost. The White House had been planning to announce a joint venture with G.M. and Ventech but shelved the idea when faced with a $1 billion price tag, with up to $250 million paid up front.
Since the president’s decision to invoke the DPA specifically against G.M., public relations officials at the company have pointed out that the G.M. is providing its resources “at cost” and plan to have the first increment ready next month. Now, the cynic would look at the G.M. statement and wonder: “so, they offer their ‘resources’ at cost. Why not provide the ventilators for what they cost to produce?”
About That Bailout...
Whether the price is “at cost” or not, isn’t G.M. the company that the American taxpayers bailed out in 2009 at the cost of $11.2 billion? Those were hard-earned American worker dollars – the same community of workers now in need of the ventilators. It would seem that the history-challenged executives and their CEO might want to step up to the plate and show some appreciation. The failure of G.M. to get out in front and resolve the negotiations quickly with the administration in favor of saving American lives may portend a more troubling issue.
If the United States faces the prospect of increasing its industrial base production to meet the challenge of a significant defense crisis, could – or would – the G.M.s, Fords, Apples, and Googles do it? What if the U.S. had to increase its production of warfighting ships, combat aircraft, tanks, and other weapons? What if America needed the full support of the tech giants? The Wuhan Coronavirus introduced our citizens to the fact that our pharmaceutical industry is significantly beholden to China for necessary medicines. What a perverse notion that, if we had to go to war with China, we could not do it without China’s help.
The book Freedom’s Forge by Arthur Herman is a compelling account of just how the American industrial giants and small manufacturers during World War II rallied to create a juggernaut of manufacturing might. Could our country respond now as it did in World War II? Several times the Department of Defense has looked at the industrial base to answer that question. The Defense Science Board (DSB) will tackle the problem again in its summer study this year, as the Board points out in “Terms of Reference – Defense Science Board Task Force on 21st Century Industrial Base for National Defense.” Recently, the aperture of the study opened, taking into account that the U.S. pharmaceutical crucial supplier base is resident in China. Furthermore, there should be a concern that G.M.’s foot-dragging raises doubts as to whether the American industry’s backbone will stiffen, and it will rise to the needs of national security, the way the “greatest” generation did.
[The views expressed are those of the author and not of any other affiliation].
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Read more from Dave Patterson.
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