Auto Bigwigs Shift Gears To Ventilators Amid Coronavirus Woes

The global novel coronavirus pandemic has resulted in shortage of key medical supplies, with hospitals clamoring for more ventilators and other equipment to fight the deadly virus. Most ICUs currently have ventilators to meet the demand of a regular flu season. Although medical device giants like Medtronic (NYSE:MDT) and others are committed to ramp up production of ventilators, it is still unlikely that the growing demand will be met amid the coronavirus pandemic. With the number of critical-stage coronavirus patients soaring lately amid the rapidly-spreading pandemic, experts are worried that the demand for the same may quickly overwhelm hospitals’ supplies.

As ventilator makers scramble to meet demand, auto biggies are lending a hand in the fight against COVID-19. On Sunday, President Trump hailed the auto bigwigs to start producing ventilators and other equipment to help combat their shortage amid the coronavirus fallout. His tweet read: "Ford, General Motors and Tesla are being given the go ahead to make ventilators and other metal products, FAST!" "Go for it auto execs, lets see how good you are?"

While Trump gave the auto giants a ‘go ahead’ through the encouraging tweet, he has not yet enforced the Defense Production Act ordering any company to marshal its resources to tackle the dwindling supplies of medical gear.

Carmakers Gear Up to Tackle Ventilator Crisis

Various auto bigwigs that have temporarily shut down auto plants are taking necessary steps to assist in the production of key medical equipment amid the virus mayhem. U.S. top carmaker General Motors (NYSE:GM) is collaborating with Ventec Life Systems to boost the production of respiratory care products to fight against the COVID-19 pandemic. The car giant will lend its logistics, purchasing and manufacturing expertise to ramp up the manufacture of critically important ventilators. Ford (NYSE:F) has also confirmed that it is in ‘preliminary discussions’ with the U.S. and British governments to assist in the ventilator supply challenge. The firm will be teaming up with GE Healthcare to expand the production of a simplified version of the latter’s existing ventilator design. These ventilators are to be built at one of the manufacturing sites of Ford, in addition to a GE location. EV maker Tesla (NASDAQ:TSLA) has also joined forces with medical device maker Medtronic to make ventilators in a bid to battle the health hazard. Tesla currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The German government has also asked domestic automakers to produce medical equipment to come to grips with supply bottleneck. The government authorities want to tap engineering and production resources of the auto industry to help alleviate the stark shortage of medical supplies. Many German auto giants have signaled their commitment to the emergency efforts to fight the virus. Volkswagen (OTC:VWAGY) is in talks with authorities and has established an international task force to explore options. The firm, which has 125 industrial 3D printers, is assessing supply chains to see how it can use 3D printing to build ventilators and other medical equipment. Other German giants including Daimler AG (NYSE:F) and BMW AG (NYSE:F) are also exploring options to use 3D printers to produce ventilators.

With the number of COVID-19 cases mounting in Italy, the government is seeking multiple options to gear up the production of ventilators. Italy-based automakers Ferrari (NYSE:RACE) and Fiat Chrysler (NYSE:F) are in talks with the country’s biggest ventilator manufacturer, Siare Engineering, to help to boost the production of ventilators and other equipment for treating the fast-spreading virus. Car parts maker Magneti Marelli is also in discussions with Siare to assist in ventilator production. U,K. government officials have requested Honda to utilize its Swindon plant to churn out ventilators. Rolls Royce (LON:RR) has also committed to building health equipment, including ventilators.

Is it Plausible for Automakers to Make Ventilators?

Indeed, the auto industry boasts a solid engineering expertise and an extensive field of parts suppliers. It has the technical expertise to make components. From a technical standpoint, auto biggies have the capability to assemble complicated machines like ventilators. However, ventilator manufacturing is a complex process. After all, it isn’t just a box with an air hose on it.

Carmakers may have to face many hurdles on the way as the process of building a car is very much different from that of making ventilators. Building ventilators relies on a skilled and specialized workforce, along with a rigorous regulatory regime. There are issues of intellectual property and FDA certification. The equipment needs to be made in sterile rooms with high level of cleanliness. Designing new tooling to make parts, and creating clean rooms for production and sourcing of non-allergenic materials are likely to make the switch-over to manufacturing ventilators a daunting task.

According to experts, the fastest way of boosting production of ventilators is to have existing manufacturers add new facilities rather than getting new manufacturers. While collaborating with traditional ventilator makers or injecting money for the ramp up of production seems to be a prudent solution, it is unclear how auto manufacturers will retool their factories to make the equipment themselves.

Final Thoughts

Well, automakers are heeding the call of government authorities and are coming forward to do their best in the face of the global health crisis. While the majority of auto companies have already shuttered operations, they are instead trying to help the countries fight the coronavirus battle by resorting to ventilator production. Although the efforts are laudable, the complications of ventilator production could make it difficult for automakers to build the machines quickly. Nonetheless, if the auto giants manage to ramp up the production of medical equipment, it would remind us of how automakers quit the production of vehicles during the Second World War and re-tooled their plants to build war munitions.

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