Trump Bets Business Will Answer Call to Fight Virus, but Strategy Bewilders Firms
It remains unclear if the effort to enlist companies like General Motors, Apple and Hanes constitutes an effective strategy.
By David E. Sanger, Ana Swanson and Maggie Haberman
- March 22, 2020
WASHINGTON — President Trump's refusal to invoke the Defense Production Act to commandeer resources for the federal government is based on a bet that he can cajole the nation's biggest manufacturers and tech firms to come together in a market-driven, if chaotic, consortium that will deliver critical equipment — from masks to ventilators — in time to abate a national crisis.
Over the past five days, after weeks of minimizing the virus and dismissing calls to organize a national response, administration officials have been pulling executives into the White House Situation Room, and connecting them by phone, in a desperate effort to unlock existing supplies and ramp up new production.
Rear Adm. John Polowczyk has been plucked from the staff of the Joint Chiefs, where he is a senior officer for military logistics, to run the effort to build a supply chain. And Peter Navarro, the White House trade adviser, is also playing a leading role. The government has essentially thrown out its existing playbook for dealing with pandemics, seizing the issue from the Department of Health and Human Services and moving it to the Federal Emergency Management Agency.
But it is far from clear that the effort to enlist companies like General Motors, Apple and Hanes, just a few of the firms that have promised to free up existing supplies of masks or repurpose 3-D printers to produce ventilator parts, constitutes an effective strategy.
In interviews with participants in the process, from business executives to government officials, there is still widespread confusion about how much and what exactly each firm is supposed to produce. Corporate executives say they face a bewildering number of requests from dozens of nations around the world, along with governors and mayors around the country, for scarce supplies. The White House has not said who will set the priority list for deliveries. And it is not clear that any of it will arrive in time for the cities and the states that are hit the hardest, including New York.
Yet, in declining to actually make use of the Korean War-era production act that he invoked last week, Mr. Trump is also avoiding taking personal responsibility for how fast the acute shortages of personal protective gear and lifesaving equipment are addressed.
On Sunday, Gov. Andrew M. Cuomo of New York made a public appeal for the federal government to take over the distribution of critical goods, arguing that Mr. Trump's insistence last week that states should find the medical equipment for themselves was turning into a senseless free-for-all.
"Don't get into this mad bidding war," Mr. Cuomo said, noting that the federal reticence was resulting in huge price surges, hoarding and shortages in some of the hardest-hit locales, including New York City.
Only the federal government can require private firms to shift their production, Mr. Cuomo said. "If I had the power, I would do it in New York," he said.
Yet as that debate has played out in the White House Situation Room, Mr. Trump's son-in-law, Jared Kushner, has thrown out the established government plan for dealing with pandemics, after concluding it was insufficient because it never envisioned a pandemic of this breadth.
Mr. Kushner and other aides concluded that only FEMA had what they internally called the "battle rhythm" to be the lead agency. But although the agency has experience cleaning up after tornadoes and hauling in trailers for temporary housing, "it likely won't know a thing about medical supply chains and devices," said Christopher Kirchhoff, who examined the capabilities of each government agency for the Obama administration and wrote a detailed report of its shortcomings in dealing with the H1N1 swine flu virus, and then Ebola.
While FEMA knows how to issue contracts rapidly and move goods, it is important not to "divorce the expertise from the execution," Mr. Kirchhoff said.
On Sunday, the FEMA administrator, Peter T. Gaynor, an experienced emergency manager, was unable to say how many face masks had been shipped from national stockpiles, or how many had been ordered. "I can't give you a rough number; I can tell you it is happening every day," he said. That led Mr. Trump, in a late afternoon news conference, to begin to announce specific figures.
To Mr. Trump's critics, the core problem is not the effort now underway, but the failure to address the issue over the past three years, after government-run simulations, including one code-named Crimson Contagion, revealed some of the huge vulnerabilities.
Mr. Trump's likely opponent in the coming presidential election, former Vice President Joseph R. Biden Jr., said the administration's effort was coming too late.
"Now a tragic and inescapable truth is clear: Even though the senior-most medical and intelligence experts in the United States government were sounding the alarm about coronavirus for months, President Trump neglected, minimized and lied about this virus," Mr. Biden said in a statement. "He failed to expeditiously get us enough tests, respirators, ventilators and other vital equipment when his peers in other countries did their duty and stood up for their people."
Administration officials, asked why they have been reluctant to use the full force of the Defense Production Act to press industry into action, say the country is not in such dire straits. There is plenty of volunteer cooperation, they say, and there is always the implicit threat of ordering mandatory measures if they do not. Mr. Trump, at the news briefing, suggested an ideological concern as well. "We're a country not based on nationalizing our business," he said.
At the briefing, Mr. Navarro said, "We're getting what we need without putting the heavy hand of government down."
In an interview, Mr. Navarro said the administration would not hesitate to use its powers in certain situations. For example, he said, some brokers had been hoarding supplies of masks in warehouses and trying to sell them at exorbitant prices.
"That's a Defense Production Act action waiting to happen," he said. "If anybody thinks they're going to sit on urgently needed supplies and profiteer from this crisis, they're going to answer to the full force of the Trump administration."
The U.S. Chamber of Commerce and the heads of major corporations have lobbied the administration against using the act. They say the move could prove counterproductive, imposing red tape on companies precisely when they need flexibility to deal with closed borders and shuttered factories.
Mr. Trump and the director of his national economic council, Larry Kudlow, as well as Mr. Kushner, were persuaded by those arguments, administration officials said.
Mr. Navarro has been coordinating with companies including FedEx, Hanes, Pernod Ricard and Honeywell to try to alleviate bottlenecks in the supply chain. Last week, he sent a cargo aircraft to Italy to fetch 800,000 nasal swabs for coronavirus testing, and pieced together a coalition of fabric companies to manufacture face masks out of underwear material. On Monday, FEMA was set to airlift 3,000 Tyvek suits, 19,000 masks and 75,000 pairs of gloves from United Technologies to New York, Washington and California, Mr. Navarro said.
Anderson Warlick, the chief executive of the textile company Parkdale Mills, said Mr. Navarro had called him early last week to ask what the company could make. By Saturday, Parkdale Mills joined Hanes, Fruit of the Loom and other companies in announcing a coalition to produce masks.
But they are not the kind hospitals most need. The new masks will be made of a three-ply underwear fabric, and do not provide the level of protection given by the N95 masks that health care workers need for intubation and other procedures.
"It's not something you're going to wear in the operating room," Mr. Warlick said of the companies' mask. "But you've got people out there today — it's kind of pitiful — wearing bandannas and everything else."
While the corporate announcements, like Apple's move to donate millions of masks, may have generated some positive headlines for the Trump administration, critics say the ad hoc approach is falling far short of the challenge.
Industry executives say companies are reluctant to crank up production lines without purchasing guarantees from the government. With the economy in free-fall and factories shuttering around the country, few manufacturers are eager to invest in new machinery or venture into new products.
American companies that manufacture face masks, medical wipes and other supplies are already operating around the clock to meet elevated demand.
Among them, 3M has said it will increase its global production capacity by a third in the next year, but that falls far short of the current need. Honeywell is adding production for N95 masks globally, and General Electric said it was hiring more workers and adding shifts to produce more ventilators.
Factories that make diapers, wipes and similar products have also switched over to manufacture the raw material that goes into N95 masks.
To make that material, industry executives said, it would most likely take three to five months to obtain and install the necessary equipment and begin production.
Similar questions loom about ventilator production. The White House has highlighted promises by Ford, General Motors and Tesla to make the machines, but analysts said it could take many months for companies to create a product that would be approved as safe by regulators.
"Ford, General Motors and Tesla are being given the go ahead to make ventilators and other metal products, FAST!" the president tweeted Sunday morning.
Both General Motors and Ford have declined to say how quickly they might produce ventilators; they have never done it before. A spokeswoman for Ford said the company was still assessing the possibility of producing ventilators.
General Motors said in a statement that it was working with Ventec Life Systems, which already makes ventilators, to help it rapidly scale up its production, using GM's logistics, purchasing and manufacturing expertise.
Carla Bailo, the president of the Center for Automotive Research, said the auto companies could use their 3-D printing capabilities to produce some parts of a ventilator fairly quickly, and then turn to their extensive network of automotive suppliers for other components, like electronics and hoses.
Ms. Bailo estimated that such cooperation might yield a product in as little as three to six weeks, though it would still need regulatory approval.
David E. Sanger and Ana Swanson reported from Washington, and Maggie Haberman from New York. Chris Cameron contributed reporting from Washington.
David E. Sanger is a national security correspondent. In a 36-year reporting career for The Times, he has been on three teams that have won Pulitzer Prizes, most recently in 2017 for international reporting. His newest book is "The Perfect Weapon: War, Sabotage and Fear in the Cyber Age." @SangerNYT • Facebook
Ana Swanson is based in the Washington bureau and covers trade and international economics for The New York Times. She previously worked at The Washington Post, where she wrote about trade, the Federal Reserve and the economy. @AnaSwanson
Maggie Haberman is a White House correspondent. She joined The Times in 2015 as a campaign correspondent and was part of a team that won a Pulitzer Prize in 2018 for reporting on President Trump's advisers and their connections to Russia. @maggieNYT
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