GE, Ford sign $336 million federal contract for ventilator production

General Electric and Ford Motor will produce 50,000 ventilators for the U.S. government under the Defense Production Act for $336 million, federal officials announced Thursday.

Production of the ventilators is expected to begin next week at a Ford facility in Michigan. The companies are expected to produce all the ventilators by July 13, according to the Department of Health and Human Services.

According to the terms in the announcement, each ventilator would cost $6,720. That’s nearly $10,000 below a previous federal contract for 30,000 ventilators at $489.4 million, or about $16,300 per unit, with General Motors and Washington-based Ventec Life Systems.

Neither the Department of Health and Human Services or GM were immediately available to comment. A Ford spokesman said production of the ventilators will be done at-cost. 

The price difference is likely due to the type of generator. The model by Ford and GE is less complex than other ventilators.

Tom Westrick, vice president and chief quality officer of GE Healthcare, previously said the more “basic” ventilators are “well-suited to address the urgent needs during the Covid crisis.”

Ford, in an emailed statement, said it appreciates “the federal government’s action and will continue to work closely with the administration to meet the immediate needs of coronavirus patients.”

The ventilator Ford and GE are producing is being licensed from Florida-based Airon Corp., a small, privately held company specializing in high-tech pneumatic life support products. The devices operate on air pressure without the need for electricity.

The Department of Health and Human Services said it has finalized contracts to produce or acquire more than 41,000 ventilators by the end of May, and over 187,000 ventilators by the end of the year.

“These companies and their incredibly dedicated workers will ensure that our country can provide our hospitals and healthcare providers with the ventilators needed to sustain and save lives during this pandemic,” Secretary of Health and Human Services Alex Azar said in a release.

Shares of Ford were down 1.6{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} during trading Thursday afternoon to $4.94, while shares of GE were down 3.2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to $6.30.