Business

GM, Philips to supply 73,000 U.S. ventilators in $1.1 billion effort

The U.S. Health and Human Services Department (HHS) on Wednesday awarded two contracts worth more than $1 billion to make ventilators needed to treat severely sick coronavirus patients and plans to announce five additional contracts later this week.

HHS awarded automaker General Motors Co (GM.N) a contract for $489 million to produce 30,000 ventilators, while it also announced a $646.7 million contract given to Dutch health technology company Philips (PHG.AS) to produce 43,000 ventilators by year end, including 2,500 ventilators by the end of May.

GM will work with Ventec Life Systems to deliver the 30,000 ventilators under the contract to the U.S. government by the end of August, with deliveries of the first 6,132 machines to occur by June 1. GM is set to begin production in Indiana next week.

Last week, U.S. President Donald Trump issued an order under the Defense Production Act to facilitate the supply of materials to produce ventilators to Philips, General Electric Co (GE.N), Hill-Rom Holdings Inc (HRC.N), Medtronic Plc (MDT.N), ResMed Inc (RMD.N) and Vyaire Medical Inc. HHS plans to announce contracts with those firms later this week, the agency said.

Trump said the order would help the firms “overcome obstacles in the supply chain that threaten the rapid production of ventilators.”

GM “will fulfill the government contract and (has) the capacity to supply more if needed,” company spokesman Jim Cain said, adding the contract also includes “consumables and accessories (hoses, stands, etc.) to support each unit.”

GM Vice President Gerald Johnson said last month the automaker is spending tens of millions of dollars on retooling costs as it produces the ventilators, and that if supplier retooling costs are included, total retooling costs were in the hundreds of millions of dollars.

Last week, GM rival Ford also said it will produce 50,000 ventilators over the next 100 days at a plant in Michigan in cooperation with GE’s healthcare unit.