Last Monday, Peloton Interactive
According to Peloton, when the facility opens in 2023, it will be one of the world's largest combined fitness manufacturing plants. All in all, Peloton Output Park is expected to bring in 2,174 full-time jobs at a cost of $400 million.
The move is just the latest in an effort by Peloton to shore up domestic production, both to cut down on shipping times and to accelerate the company's push into new markets. According to Peloton's CEO, John Foley, the new manufacturing hub will pull down production costs and allow the company to price its Bike Bike+ and Tread machines more competitively.
"The new Peloton Output Park gives us a massive strategic lever to make sure we have capacity, quality, and economies of scale in our Bike and Tread product lines for years and years to come," Foley wrote in the company's announcement.
2021 has been a rocky year for Peloton. Product recalls, shipping delays, and changing habits due to relaxed social distancing are taking a toll on the company, causing its stock to sink more than 35% year to date.
Last month, Peloton was forced to recall its Tread and Tread+ machines after the death of one infant and the injury of 70 others. According to the company, the recall will cost them $165 million in revenue.
In the meantime, Peloton has been taking decisive steps to address its supply and shipping issues. Increased demand due to the pandemic strained the company's Asian factories, resulting in shipping times as long as ten weeks, much to the chagrin of Peloton's customers. In February, the company invested $100 million into its shipping infrastructure, incorporating air and expedited ocean freight.
And in April, Peloton finalized its $420 million buyout of fitness manufacturer Precor. Thanks to the deal, Peloton now has access to two domestic factories in Washington and North Carolina, ahead of the new factory's opening in 2023.
"Having more flexibility in running a global supply chain is also going to allow us to sleep better," Foley told CNBC. "We believe that working out at home is the future," he added "that is why we're investing in this facility.
- 1. https://investor.onepeloton.com/news-releases/news-release-details/peloton-build-first-us-factory
- 2.https://www.cnbc.com/2021/05/24/peloton-to-invest-400-million-on-first-us-production-facility-in-ohio.html
- 3.https://finance.yahoo.com/news/peloton-interactive-announces-starting-first-180148804.html
- 4.https://www.fool.com/investing/2021/04/08/can-peloton-finally-overcome-supply-constraints/
- 5.https://www.cnn.com/2021/05/06/business/peloton-recall-losses/index.html