- COVID-19: A Mission as a Blueprint
- Supply, demand, and the coronavirus
- The right time to do the right thing
- Another day, another opportunity to act
- Ramping up ventilator production: Lessons from WWII
- 1. Ramping up production takes time
- 2. Sharing knowledge and supplies
- 3. Give them what they need
COVID-19: A Mission as a Blueprint
As 2019 came to a close and a new decade commenced, January’s Lunar New Year celebrations across China came to a screeching halt. The novel coronavirus had taken hold.
By late March, COVID-19 had infected more than 786,0001 people globally, and a headline became every conversation the world over.
Shortages of protective medical gear, hospital beds, staff, and answers left little room for a plan, leaving doctors and nurses working bed to bed, moment to moment.
I knew [coronavirus] wouldcome to our door.
– Philomena Flaherty, Medtronic assembly line worker, Galway, Ireland
Supply, demand, and the coronavirus
As hospitals became flooded with critically ill patients, it quickly became clear that the global supply of ventilators would ly not meet the time-sensitive demand. New York Governor Andrew Cuomo estimated a need for 30,000 in his state alone.
2 So we started by increasing production. Our Ireland facility doubled capacity and introduced 24/7 operations. We fortified our supply chain, brought in new partners, and trained new employees. But it wouldn’t be enough.
The world needed something more sustainable.
Devastated by the coronavirus, Italy is the first European country to impose a national quarantine. In a matter of weeks, hospitals are running beds and equipment. A team of Medtronic employees helps build a temporary hospital in Milan, then trains new staff on how to use our ventilators. Within 15 days from the start of construction, the first patients are admitted.
Everything we make and everything we do works to alleviate pain, restore health, and extend life. We provide health, and we provide hope. People are depending on us, and we cannot let them down. We must continue to innovate and fulfill our Mission.
– Geoff Martha, Chief Executive Officer, Medtronic
Unsure of what lay ahead, we started with our one constant — our Mission to alleviate pain, restore health, and extend life — as our guide. It was time to put our purpose into action. We virtually gathered our global leaders, biomedical engineers, and scientists to devise a plan.
How could we best help patients? Send ventilators to the places where they were needed the most — first China, later Europe, and then the United States. How could we support innovation? Reposition our invention submission program to focus on virus-fighting technology.
How could we expand access to respiratory support for patients? Partner with academic institutions and others to design a light ventilator. How could we do it all faster? Work with the FDA to authorize emergency use of our compact ventilator for use in the United States.
Yet there was more we could do. More patients, more willing hands, more of everything but time. We met two hard truths. One: A single company can’t do it all.
Two: While the challenge spanned the globe, some were better prepared to face it than others. Things differed between factories (let alone countries) because our industry, our world, wasn’t built for this.
The only way through was to start from the drafting table.
It took 10 years for the U.S. economy to create 23 million new jobs. It took the coronavirus just a month to destroy almost as many.
A world in disbelief
The Eiffel Tower stands watch as Paris goes quiet. Times Square’s bright lights shine over empty New York City streets. Hospitals overflow while the rest of the world pauses. Corner store to Apple store, only the essential remain open.
Parents are homeschooling, teachers are making masks, and healthcare workers take the metro another day. Prime Minister Boris Johnson of Britain tests positive for COVID-19, the market crashes, and vaccines are still a year away.
The world continues the only way it can — one day at a time.
The right time to do the right thing
On March 30, we began publicly sharing design specifications for our portable, compact ventilator allowing others around the world to join the fight. This move helped major manufacturers reevaluate how they operated to support the effort. In the first week, more than 90,000 had registered for the blueprint.
I don’t think people can really, fully appreciate the extraordinary effort of these people.
– Dr. Anthony Fauci, Director of the Institute of Allergy and Infectious Diseases,
describing the heroics of healthcare workers on the front lines of the outbreak3 Ventilator Training Alliance Vingroup Joint Stock Company (Hanoi, Vietnam) Foxconn Technology Group (Taiwan) Baylis Medical Company, Inc. (Ontario, Canada)
- Baylis Medical Company, Inc. (Ontario, Canada): Baylis Medical ramped up production of its ventilators, which are the specifications that Medtronic released to the public.
- Foxconn Technology Group (Taiwan): The world’s largest contract assembler of electronics (including iPhones™ and iPads™) plans to produce 10,000 Medtronic ventilators over the next year. If needed, the company says it can increase production capabilities to more than double its current commitment.
- Vingroup Joint Stock Company (Hanoi, Vietnam): Vinfast (auto) and Vinsmart (tech) partnered with Medtronic to produce low-cost ventilators designed by Massachusetts Institute of Technology.
- Ventilator Training Alliance: An industry-wide effort launched, led by Medtronic, to provide professionals one location for training across all ventilator models. Dräger, GE Healthcare, Getinge, Hamilton, Philips, and Vyaire Medical joined.
- SpaceX (Palo Alto, CA): Backed by founder Elon Musk, for a limited time Space Exploration Corporation (SpaceX) agreed to manufacture a key component for the most advanced Medtronic ventilator.
- JigSpace (Melbourne, Australia): Using its JigSpace Workshop Pro platform, the Australia-based company helped create 3D training guides viewable in augmented reality via an iPhone or iPad to help upskill global manufacturers accessing our open-sourced ventilator design specs.
JigSpace Video – (00:58)
Using its JigSpace Workshop Pro platform, the Australia-based company helped create 3D training guides viewable in augmented reality via an iPhone or iPad to help upskill global manufacturers accessing our open-sourced ventilator design specs
More information (see more) Less information (see less)
We stand together
As a world, we adapt and overcome. Without a word or call for thanks, people stand behind those who need them most. Doctors and nurses receive masks made from extra yards of fabric. Delivery drivers find care packages at the door. Family and friends reunite through windows. And communities rally around hometown heroes. Day-by-day, the fight continues. People continue.
We cannot return to life before the pandemic. Our everyday lives will be different.
– Angela Merkel, German Chancellor4
Another day, another opportunity to act
We work for, and will always stand for, the betterment of all. As we continue through unprecedented times, Medtronic will continue to take Mission-driven action. We will keep sharing our knowledge, find new ways to help healthcare providers and patients, and support the communities that keep us going. All that we do, we do for human welfare — for humankind.
Leaning into change
It took a pandemic to break down barriers to innovation.
Is this wave of ingenuity here to stay?
Though we are separated by distance, the world is coming together to fight coronavirus.
Apple, iPhone, iPad, and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.
Ramping up ventilator production: Lessons from WWII
Ethan Ilzetzki, Hugo Reichardt 17 April 2020
The rapid spread of the COVID-19 virus revealed acute shortages of medical ventilators in countries around the world. The Economist estimated on 21 March that the US would run spare ventilators within four weeks.
The situation may even be worse in other countries (such as the UK) and supplies are extremely limited in many developing countries.
GlobalData estimates that global demand for ventilators this year will be 880,000, about nine times current global production capacity.
Governments have approached the challenge of ventilator shortages in different ways.
Germany and Italy procured devices from existing leading manufacturers, while the US and UK have drawn wartime analogies and have called not only on existing ventilator producers, but also on firms from other industries to contribute to the war effort.
The UK government has ordered ventilator production from a medley of firms, including Airbus and Dyson. The US invoked the Defence Production Act last week to help ventilator producers receive supplies and has called on auto manufacturers Ford and General Motors to produce ventilators.
Calling on auto manufacturers to produce medical products – well outside their product range – echoes auto companies’ role in wartime production. With wartime analogies abound, it is worth reviewing the actual record of converting civilian to wartime production. We draw three lessons from US auto manufacturers’ experience in aircraft production during WWII.
1. Ramping up production takes time
With the pandemic peaking in parts of western Europe and close to peaking in the US and the UK, little time can be lost in replenishing ventilator supplies. There is no doubt that sophisticated automotive firms have the technological capacity to eventually produce a large number of medical devices.
The question is whether they can they convert to medical equipment production in time to meet current needs. US auto manufacturers supplied a substantial share of motors, tanks, and jeeps during WWII. But these munitions were similar to their peacetime product lines.
They also ventured into new products such as aircraft and a somewhat forgotten lesson from the war is how slow and difficult the conversion process was.
Perhaps the most notable example of such wartime conversion was the Ford B-24 bomber aircraft plant at Willow Run. Against the advice of the US Office of Production Management (OPM), which wanted the plant to produce only aircraft parts, Ford management insisted that they would produce entire planes (Herman 2012: 222).
They broke ground on a factory in Ypsilanti, Michigan in March 1941 and promised to produce 500 bombers a month starting in April 1942. The government’s scepticism was the observation that conversion takes time.
As William Kundsen, the head of the OPM put it to President Roosevelt: “Everyone knows that America is the greatest mass producer in the world. Not everyone knows that mass production takes time to get started” (quoted in Herman 2012: 146).
Careful observation of existing experiences suggested that the conversion process took around 18 months in most industries (Herman 2012: 102, 146). Figure 1 vindicates this view in retrospect.
The vertical lines show dates (from left to right) on which the Willow Run plant was founded, the plant had promised to begin delivering bomber aircrafts, and Ford first delivered the B-24s at the promised rate of 500 per month. Ford ultimately delivered on this promise, but the lag time was, if anything, greater than the US government feared.
Figure 1 Monthly production of heavy bombers in auto and aircraft manufacturers
Note: The figure shows total monthly production of heavy bomber aircrafts in Ford’s plant at Willow Run and in traditional aircraft manufacturers. Source: Sourcebook of World War II Basic Data and Ilzetzki (2020).
During this lag time, existing bomber producers put out more than 11,000 bomber aircrafts – more than Ford produced through the entire war.
They did so by roughly doubling employment and almost tripling plant floor space in 1942 alone.
This suggests that governments are better served by providing resources to existing producers than diverting them to other industries, especially when timely production is of high importance.
Analogies to the present should be drawn carefully. At the time, an aircraft consisted of nearly half a million parts and was far more complex a machine than an automobile. In contrast, medical ventilators comprise of less than 1,000 components and may be more amenable to imitation.
In an era of 3D printers, global supply chains, and just-in-time production, conversion may be a more streamlined process.
However, ventilator production is distinct from auto manufacturing, and currently limits on production aren’t due to the ventilator producers themselves, but their supply chains.
2. Sharing knowledge and supplies
What limits the supply of ventilators? Communication with top existing ventilator producers suggests they have the potential to increase production substantially. The main obstacle to mass ventilator production is the limited supply of production inputs: parts and components.
The global hunt for production inputs risks devolving into a zero-sum game where ventilator producers compete for and bid up production input prices without increasing world ventilator supply.
In this respect, auto manufacturers’ conversion to ventilator production may fail to increase the global availability of ventilators even if they are able to ramp up production themselves.
Similar competition over production inputs occurred during WWII and was recognised by the Truman Committee by the end of 1942. Aircraft manufacturers were fierce competitors before the war and cooperation didn’t come naturally to them. By 1942, the top nine US aircraft manufacturers were facing a backlog of $9 billion in orders (Klein 2013: 439).
With shortages abound, manufacturers began competing over aircraft parts and poaching workers from one another. In response, Donald Douglas (founder of Douglas Aircraft) coordinated his peers under the umbrella of the Aircraft War Production council (AWPC). Aircraft manufacturers agreed to share everything including blueprints, techniques, and parts.
For example, Vultee Aircraft shared engineering data worth $250,000 and 30 of its engineers with Consolidated Aircraft to aid the latter in B-17 production. Aircraft companies within the AWPC supplied each other with missing parts.
Narrative histories from the period suggest that this cooperation helped maintain a steady output of aircrafts, particularly from plants in Southern California that were members of the AWPC.
The parallel to current circumstances is clear. National – and indeed international – supply chain coordination would help steer scarce production components to their best use. An international repository of knowledge should be created and supply chains should be mapped out and shared internationally.
Here, too, the analogy is imperfect. Many existing ventilators are manufactured using specialized and custom-made parts, making it difficult to transfer components from one firm to another.
However, policy should focus on easing the procurement of these parts rather than on the manufacture of final ventilators.
A spokesperson for ResMed (a leading ventilator manufacturer) told us in private correspondence that “ResMed encourages all non-ventilator manufacturers wishing to help to please produce more of these needed components, rather than take from the limited supply to try making their own ventilators”.
3. Give them what they need
At the end of March, the US government was to sign an agreement with General Motors and their partner Ventec Life Systems for the production of 80,000 ventilators.
The deal, however, was held back to assess the project’s costs. A particular point of discussion was GM’s requirement to be paid in advance for the retooling of their Kokomo plant to ventilator production.
President Trump accused GM of wanting “top dollar”.
Here too, there are historical analogues. As the WWII production drive unfolded, corporations were reluctant to build new plants and production lines to meet a temporary increase in demand.
This reluctance was itself borne previous historical experience. In WWI, private businesses met increased public demand for military equipment through privately financed expansions.
This left businesses with large excess capacity and debt overhangs in the post-war period.
Having learned the lesson, in WWII, the Defence Plant Corporation (a government agency that was the successor of the New Deal Reconstruction Finance Corporation) provided $16 billion (17% of pre-war annual GDP) in direct investments in private productive capital – roughly two-thirds of wartime capital investment. The government retained ownership over the facilities and machinery it purchased, leased them to private corporations at a 4% annual rate (the government’s estimate of the depreciation rate) for the duration of the war, and gave operators the option to purchase the capital at its original cost at war-end.
Figure 2 shows cumulative capital investment in US aircraft plants during WWII.
It shows that the aircraft production boom was almost entirely publicly financed and historical narrative suggests this was important to the success of the production drive.
This is an important illustration that governments need to put financial resources where they claim their priorities lay, rather than try to win (literal or metaphorical) wars on the cheap.
Figure 2 Public and private investment, structures and machinery, aircraft producing plants
Source: Archives of the War Production Board and Ilzetzki (2020).
Baldwin, R (2020), “The Supply Side Matters: Guns Versus Butter, COVID-style”, VoxEU.org, 22 March.
Gourinchas, P-O (2020), “Flattening the Pandemic and Recession Curves,” in Baldwn, R. and B. Weder di Mauro, Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes VoxEU.org Ebook, London: CEPR Press.
Herman, A (2012), Freedom's Forge: How American Business Produced Victory in World War II. Random House.
Ilzetzki, E (2020). “Government Purchases and Plant-Level Productivity: Evidence from World War II,” mimeo.
Klein, M (2013), A Call To Arms: Mobilizing America for World War II. London: Bloomsbury Press.
Posen, A (2020) “Containing the Economic Nationalist Virus through Global Coordination,” in R Baldwin and B Weder di Mauro, Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes, a VoxEU.org eBook, CEPR Press.
Wei, S-J (2020) “Ten Keys to Beating Back COVID-19 and the Associated Economic Pandemic,” in Baldwn, R. and B. Weder di Mauro, Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes, a VoxEU.org eBook, CEPR Press.
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1 See https://www.globaldata.com/ventilator-crisis-during-coronavirus-outbreak-as-over-880000-are-needed/ and https://www.bloomberg.com/news/articles/2020-03-30/a-ventilator-maker-is-germany-s-best-performing-stock-this-year
2 See Gourinchas (2020) on the constraints that limited medical supplies put on the health system and Wei (2020) on the need to get ahead of the game on medical supply production.
4 See Baldwin (2020) for other wartime lessons for the COVID-19 crisis.
5 Two additional auto manufacturers – General Motors and Nash – converted to aircraft production, with similar results.
6 In the words of Nick Oliver, automotive industry expert and Professor of Management at the University of Edinburgh: “There is no product that I can think of in the automotive industry that has to move air and oxygen around in a similar way to a ventilator.” Source: https://www.wired.co.uk/article/car-manufacturers-ventilators.
7 This is private correspondence with officials at Draegerwerk AG, ResMed, and Hamilton Medical: three leading ventilator manufacturers.
They also cite the time required to train personnel to the specialized ventilator production process and shortage of testing equipment and specialized testing facilities.
Hear also Planet Money episode 987 and see Financial Times (30 March 2020) in this regard.
8 See Posen (2020) on the need for an international response to the crisis, including on medical supplies.