Peloton to Begin Outsourcing Manufacturing

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The cycling company will no longer make its own cycles.

In the past year, Peloton, manufacturers of stationary exercise bicycles and treadmills, has been experiencing some severe financial difficulties. The company went through a major boom back in 2020 as people began exercising almost exclusively at home due to the COVID-19 pandemic. However, as pandemic cautions have eased and gyms have reopened, the company has found itself rapidly losing profits, which in turn has necessitated cost-cutting measures.

The latest of these measures is a major change in Peloton’s manufacturing policies. Specifically, Peloton won’t be doing their own manufacturing anymore. The factories operated by Peloton’s sub-company, Tonic Fitness Technology, will be shuttered, while manufacture of Peloton products will be outsourced to Taiwanese manufacturer Rexon Industrial Corp. All Tonic operations will be suspended until at least the end of 2022, if not longer, and approximately 600 Tonic employees will be laid off.

“We believe that this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility,” said CEO Barry McCarthy in a press release.

McCarthy’s goal since becoming CEO has been to pivot Peloton away from a manufacturer of exercise equipment, and instead focus on its role as an exercise program subscription.

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