General Motors Company GM has signed a $489.4-million contract with the U.S. Department of Health and Human Services (HHS) to build 30,000 ventilators in collaboration with Ventec Life Systems for the national stockpile to aid COVID-19 patients. The car giant will lend its logistics, purchasing and manufacturing expertise to ramp up the manufacture of critically-important ventilators.
Reportedly, the contract is the first for ventilators under the Defense Production Act, which President Trump issued last month to fight against the deadly virus. Notably, the number of confirmed coronavirus cases in the United States has crossed 435,000.
General Motors will manufacture and supply the ventilators to the government by the end of August, with the first 6,132 ventilators to be delivered by Jun 1. Production for the same is expected to begin next week in the company’s Indiana plant. General Motors will also hire an estimated 1,000 full-time temporary workers back to the plant to build the ventilators.
Each ventilator is expected to cost around $16,000, including the parts that hook the ventilators to patients. The company, however, will cover its costs but does not intend to make a profit on the ventilators.
General Motors currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Various other auto bigwigs that have temporarily shut down auto plants are taking necessary steps to assist in the production of key medical equipment. U.S. carmaker Ford F is collaborating with 3M and GE Healthcare to combat the coronavirus pandemic. Also, Tesla TSLA has joined forces with medical-device maker, Medtronic, to make ventilators. Volkswagen VWAGY is in talks with authorities and has established an international task force to explore options, while Daimler AG and BMW AG are also exploring options to use 3D printers to produce ventilators.
However, across all manufacturers, there is a global backorder of critical-care ventilators capable to help patients battling coronavirus. The companies are adding thousands of units of new capacity with a significantly-expanded supply chain capable of supporting high volume production.
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