Despite ramped up production, U.S. medical equipment manufacturers weren’t able to keep up with soaring demand for ventilators in the early wave of the COVID-19 pandemic. To make matters worse, many countries closed their borders, which hurt the flow of supply to those that needed it the most. In hopes to slow demand, ventilators became reserved for patients deemed the most critical, and tended to be allocated to younger patients first. 

Several large manufacturers were recruited to produce ventilators as a way to address the crisis in supply. These manufacturers, who previously never made ventilators, became new players in the industry. In April, the Department of Health and Human Services created a contract for $336 million with General Electric Co., in partnership with Ford Motor Co., under President Donald Trump’s Defense Production Act to create 50,000 ventilators by July. General Motors Co. also received a contract for $484.4 million to produce 30,000 ventilators by the end of August.

GM’s contract created a partnership with Ventec Life Systems Inc. through StopTheSpread.org, a private sector non-profit looking for ways to contain the pandemic. When the project began, automotive plants were closed because of the pandemic. GM leveraged their idle global supply chain to source new partners and support the drastic increase in production of ventilators. Their traditional auto suppliers were able to produce all 700+ components of the ventilators in less than two weeks’ notice. 

In this same time frame, GM retrofitted a vacant production building in Kokomo, Indiana, to regulatory standards for the manufacture of Ventec’s VOCSN ventilator that combines five critical care machines into one small product. GM was able to use its knowledge in automotive manufacturing to increase Ventec’s production from approximately two units per hour to 20 units per hour. 

Once the mass production of all 30,000 ventilators was completed, GM turned the facility over to Ventec to continue their own production. This gave Ventec the opportunity to hire new employees in the city of Kokomo and surrounding areas. Unfortunately, as of late last year, Ventec announced that it was closing its plant in Kokomo as the market in ventilators only required its manufacturing location in Washington state. 

Outlook

The pandemic has uncovered weaknesses in the U.S. healthcare supply chain, and it’s time for us to reevaluate supply lines across industries.

Michael Hasler is senior lecturer, and Rose Hernandez is a research assistant, at The University of Texas McCombs School of Business.