By Jeffry Bartash, MarketWatch
President Trump on Friday afternoon said he signed a memorandum requiring General Motors to make ventilators for hospitals to help treat patients suffering from the COVID-19 illness, invoking for the first time a 70-year-old law created during the Korean War that gives the government broad authority over private businesses.
The order directs 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.”
GM /zigman2/quotes/205226835/composite GM -1.71% had previously promised to shift some automotive production over to ventilators, but the president on Friday morning accused the Detroit behemoth of falling short on its promise.
Trump has been criticized by some governors and Democrats in Congress for not using this authority earlier on. The White House appeared to shrink from forcing privately owned companies to comply under pressure from conservatives, preferring to rely on negotiations and voluntary efforts.
In a statement, Trump said, “Our negotiations with GM regarding its ability to supply ventilators have been productive, but our fight against the virus is too urgent to allow the give-and-take of the contracting process to continue to run its normal course. GM was wasting time. Today’s action will help ensure the quick production of ventilators that will save American lives.”
GM defended its efforts after the president’s earlier criticism, saying it was racing to produce more ventilators with the help of Ventec Life Systems. The company said it would be soon able to make tens of thousands of masks and ventilators a week.
“Ventec, GM and our supply base have been working around the clock for over weeks to meet this urgent need. Our commitment to build Ventec’s high-quality critical care ventilator, VOCSN, has never wavered,” the automobile maker said in a statement.
In after-hours trading, GM shares were unchanged.