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Peloton Stops All In-House Manufacturing

Peloton has announced plans to stop in-house manufacturing, outsourcing all its bicycle and treadmill production as it slims down operations.

Peloton has split manufacturing between its own in-house facilities, and Taiwan-based Rexon Industrial, for the past three years. It acquired Tonic Fitness Technology in 2019 for this purchase, making the standard Bike and top-end Bike+ in Tonic’s factories.

Peloton’s shares have fallen 75 per cent over the past year. A February cull saw 3,000 job losses, and the removal of CEO John Foley.

Since then, Peloton has hiked subscription costs, introduced a gear leasing program, and cancelled plans to build an Ohio factory – all signs they were moving away from selling high-end exercise gear, and moving more into services.

“We are going back to nothing but partnered manufacturing,” Chief Supply Chain Officer Andrew Rendich told Bloomberg News.

“It allows us to ramp up and ramp down based on capacity and demand.”

Peloton will sack 570 employees in Taiwan who work at the Tonic facilities, while retaining 100 employees to work on ground with third-party manufacturers, such as Rexon.

“One of the best simplifications we can do is go to partner manufacturing and getting out of the business of owned manufacturing,” Rendich said.

“This allows us to do it even better than we have in the past.”

Stock jumped 6.8 per cent upon Peloton’s announcement.

 

 



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