GM’s New Model for Corporate Responsibility in the Age of COVID-19

President Trump declared the COVID-19 coronavirus a national emergency on Friday, March 13, setting the wheels in motion to focus the energy of the nation on critical tasks. Or not, as the case may be. The President “invoked” the Defense Production Act (DPA) in the days that followed, but he failed to actually implement it. As a result, states have been left to scramble for a limited supply of ventilators and other lifesaving equipment while the death toll mounted.

In effect, the President dropped this supply crisis squarely in the lap of U.S. business leaders. Some have dropped the ball, most notably the U.S. Chamber of Commerce, which has reportedly lobbied heavily against implementing the Defense Production Act.

Others, however, have taken action. In particular, General Motors has provided a model for corporate response to the COVID-19 crisis.

General Motors rushes in where the president fears to tread

GM’s strategy has simply been to act upon its own resources rather than waiting for the President to exercise his authority under the Defense Production Act.

Ventilator production was apparently discussed between GM and the White House around the time of the March 13 emergency declaration, but nothing came of those talks.

Similarly, on March 18 Reuters reported that Barra discussed ventilator production with White House economic advisor Larry Kudlow, without any substantive word on reaching a deal.

Indeed, the deal still appeared to be in limbo on the morning of March 20, when the President held a lengthy press conference with the White House Coronavirus Task Force.

The President referred vaguely to GM during the event. However, he did not seem aware that GM had already set its ventilator production plan into motion — which the company announced by press release later that same day.

Cutting the leader of the free world out of the loop

With the March 20 press release, GM made its intentions on ventilator production crystal clear. The company is partnering with the ventilator specialist Ventec to ramp up production. GM and Ventec are also collaborating with the newly launched business organization StopTheSpread.org.

Beyond the nuts-and-bolts information, however, the press release conveys a much broader message about the profound lack of leadership from the White House.

Instead of giving the president at least passing credit for discussions leading up to the March 20 announcement, GM’s press release creates the inescapable impression that Donald J. was entirely irrelevant to the company’s efforts.

The press release makes no mention of any discussions or encouragement from White House officials of any status, let alone the President. It also includes no quote from the president, though both Ventec and Stopthespread.org are quoted.

In addition, GM Chairman and CEO Mary Barra wraps up the press release with this somewhat loaded observation:

“We are working closely with Ventec to rapidly scale up production of their critically important respiratory products to support our country’s fight against the COVID-19 pandemic. We will continue to explore ways to help in this time of crisis.”

If GM intended to work with the White House on ventilator production, that statement would have been the place to bring up the President’s name.

Instead, it’s cricket chirps for Trump..

That’s it. No mention of the president or of any plans to coordinate with the White House — though that’s understandable, considering that there appears to be no reliable guidance from the White House, Task Force or no Task Force.

Still no Defense Production Act…

That’s not the end of the story. As the New York Times reported on March 26, last week the Trump administration claimed the deal was off because GM’s (or Ventec’s) ventilators were too expensive.

That doesn’t appear to make much sense, considering that there does not seem to have been any formalized “deal” between the White House and GM to begin with.

GM has an entirely different view of the situation — and judging from the media record, it is also the correct view.

In an email to TriplePundit on March 27, the company stated that “Ventec, GM and our supply base have been working around the clock for over a week to meet this urgent need. Our commitment to build Ventec’s high-quality critical care ventilator, VOCSN, has never wavered.”

“The partnership between Ventec and GM combines global expertise in manufacturing quality and a joint commitment to safety to give medical professionals and patients access to life-saving technology as rapidly as possible. The entire GM team is proud to support this initiative,” the statement concluded.

In addition, on March 27 GM issued another press release updating its plans for manufacturing ventilators.

The new press release clarifies that GM will indeed retool one of its factories (a plant in Kokomo, Indiana) to produce Ventec’s ventilators, in addition to supporting Ventec’s supply chain. GM is also converting its Warren facility to make surgical masks for medical professionals leading the fight against COVID-19.

Finally, the Defense Production Act launches to take on COVID-19

GM’s March 27 press release emphasizes that “across all manufacturers” there is intense pressure to ramp up production of critical supplies.

That observation occurs in the second paragraph of the release, which is a position of some significance — but what, is the question.

President Trump may have answered that question later on the evening of the 27th, when he announced that he would finally implement the Defense Production Act in order to force GM to make the ventilators.

Again, that doesn’t quite make sense considering that GM was already well on track to make ventilators and surgical masks, too.

In that context, it appears that Barra has successfully baited the president into implementing DPA, by refusing to give him any public credit for the company’s production initiatives. The only avenue she left him was to invoke an authority that he had been conspicuously avoiding for days, despite repeated pleas from health and national security experts among many others.

On her part, Barra was relentless in her dismissal of any role for the president to play. She concluded the March 27 release by stating that “we are proud to stand with other American companies and our skilled employees to meet the needs of this global pandemic.”

It’s not shocking that the president would deploy his powers in office to hit back against a strong female leader, but now he is boxed in to implementing DPA on a broad basis. GM’s March 27 press release makes the case for implementing DPA “across all industries” rather than using it selectively to punish individual corporate enemies who refuse to kowtow.

For that matter, as of this writing it is still unclear whether or not Trump’s latest statement on DPA actually sets the wheels in motion for implementation. It might just be more of the same hot air.

Either way, more ventilators are on the way.

Image credit: General Motors