Today, Peloton has announced that it will stop making their own bikes and treadmills, and instead seek to outsource all manufacturing. CEO Barry McCarthy said this is will allow the company to simplify its supply chain and fix its cost structure.
Peloton says it plans to eliminate all in-house manufacturing and instead will rely on outsourced manufacturing. Taiwanese manufacturer Rexon Industrial is now to become the primary manufacturer of the Peloton’s Bike and Tread.
In a statement, Peloton CEO Barry McCarthy wrote, “We believe that this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility.”
After canceling the construction of its own production facility in Ohio, Peloton will now also be suspending operations at its Tonic manufacturing facility.
With all manufacturing to be outsourced, one of the biggest unanswered questions is what will come of Peloton’s $420 million acquisition of Precor. Precor is currently one of the world’s largest manufacturers and suppliers of commercial fitness equipment.
Connect The Watts’ Take
While this may seem like bad news, it may be a positive (if not necessary) step for Peloton to find some stability with cash flow. It may also allow Peloton to focus on what it truly excels at: great content.
However, the elimination of manufacturing likely also means the company will need to let go of even more employees than the 2,800+ already fired this year.
What this move means for the future of the new Peloton Rower, or return of the Peloton Tread+, is unknown. Mentions of the Peloton Rower were removed from Peloton’s social media last month, so a delay is likely.
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