Rick Haglund: Big 3 automakers could enlist to produce COVID-19 medical equipment

Comprehensive plan, government leadership are needed

March 20, 2020 5:49 am

Ford F150 trucks go through robots on the assembly line at the Ford Dearborn Truck Plant on September 27, 2018 in Dearborn, Michigan. The Ford Rouge Plant is celebrating 100 years as America’s longest continuously operating auto plant. | Bill Pugliano/Getty Images

Detroit became known as “the arsenal of democracy” almost 80 years ago as automakers transitioned from civilian to military production, a crucial element in the Allies’ victory over Germany and Japan in World War II.

As the deadly coronavirus grips the nation, could Michigan become “the arsenal of health,” helping to defeat a virus that has plunged the United States into the worst public health crisis in decades?

Gov. Gretchen Whitmer said Wednesday she has been talking to unnamed manufacturers about producing gowns and other medical equipment the state can’t get from the federal government.

General Motors and Ford Motor Co. said Wednesday they’re exploring the possibility of building medical equipment in their U.S. and United Kingdom factories.

And some experts say automakers must play a role in fighting COVID-19, the disease caused by a new coronavirus.

“The auto industry answered the call in World War II to convert manufacturing to support the war effort, and it must once again answer the call to support the war on this global pandemic,” Kristen Dziczek and Carla Bailo of the Ann Arbor-based Center for Automotive Research wrote Tuesday in the Hill.

But the task of cranking out more critically needed ventilators, respirators and other medical material could be as monumental as it was for automakers switching from building Buicks to bombs in 1942.

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“What’s important is if you’re going to solve this, it can’t be a piecemeal action,” said Steven A. Melnyk, a professor of supply chain and operations management at Michigan State University. “You have to think about this as a unified action.”

That kind of action by the federal government, which needs to lead such an effort, is sorely lacking in Melnyk’s view. 

“Governments are horrendous when it comes to system solutions, but that’s what’s needed,” he said.

Top industry and government leaders should meet in a weekend “scrum” to hammer out the complex issues involved in quickly ramping up production of medical equipment, Melnyk said.

“If this is an important issue, the government should work with industry to give it access to raw materials and the resources to add capacity,” he said. “Government should give [financial] incentives to companies to do this.”

But COVID-19 is quickly spreading at a time when automakers and their suppliers are being threatened by the virus, raising questions about their ability respond to the nation’s need for more medical equipment.

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Fiat Chrysler, Ford and GM announced Wednesday they were closing their North American factories at least through the end of March. Many suppliers will have no choice but to follow suit.

A six-week industry shutdown could result in the loss of 566,000 U.S. jobs and $43.7 billion in lost wages, according to a Center for Automotive Research estimate.

“The big crisis is small supplier liquidity,” Dziczek told me. “Getting money to them for however the shutdown lasts is critical. “Seventy-five percent of auto supplier establishments employ fewer than 100 people. It’s a big, big problem.” 

Most auto workers in Michigan are employed by suppliers. There were 132,200 workers employed by auto suppliers in the state at the end of 2019, compared to just 42,200 workers working for automakers, according to the Michigan Department of Labor Market Information and Strategic Initiatives.

Melnyk said plants could be reopened for medical device production. That would require disinfecting factories and testing workers (if enough test kit were available, which is a problem) to prevent them from passing the virus to each other.

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Workers could be asked to volunteer for the assignment, a move that would likely require the approval of the United Auto Workers union.

But mobilizing industry for medical equipment production differs in several significant ways from the auto industry’s conversion to military manufacturing in World War II.

President Franklin Roosevelt’s administration began planning for the conversion in 1940, two years before automakers switched to building war material. 

Roosevelt enlisted GM President William Knudsen to lead the industry side of the effort and lobbied for policies that included advance payments to companies for retooling production lines.

“We don’t understand what happened in World War II,” Melnyk said. “There was a real buildup before the start of the war.”

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Conversely, we’re in the midst of a crisis with virtually no plan for how to ramp up production of critically needed medical supplies and equipment.

And unlike World War II, COVID-19 might last only weeks or months, leaving companies with an inventory of products that could quickly decline in value.

Manufacturers might not take the risk of switching production to medical equipment unless they get some financial protection from the federal government, Melnyk said. 

But what’s needed most of all is leadership from the federal government, which Melnyk says is lacking.

“In every major crisis in American history, someone has stepped forward,” he said, citing Roosevelt’s speech the day after Japan attacked Pearl Harbor. “If history teaches one thing, leadership is critical.”

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Rick Haglund
Rick Haglund

Rick Haglund writes the "Micheconomy" column for the Michigan Advance. He's a former reporter and business columnist for Booth Newspapers, now the MLive Media Group, with extensive experience covering Michigan’s economy and the auto industry. He now works as a freelance writer based in Southeast Michigan.