Peloton outsources production of its bikes and treadmills amid struggles

It’s hard not to feel for Peloton’s new leadership. The team has the harrowing task of attempting to right the ship following explosive growth and a subsequent messy crash back down to Earth. The reasons for the home exercise firm’s struggles are numerous, including some overly ambitious plans set at the height of the company’s pandemic powers.

Setting things straight is going to require a fundamental rethink of many of Peloton’s core competencies, including, but not limited to its exercise equipment. Today the company announced that it will no longer be manufacturing its own hardware, including the Bike and Tread lines.

Moving forward, Taiwanese manufacturer Rexon Industrial Corp. will be building Peloton’s connected home fitness systems. The firm specializes in power tools and fitness equipment, touting partnerships with Bosch and Hitachi, along with leading gym brands Precor and LifeFitness. Peloton is spinning the news as an exciting new partnership.

Chief Supply Chain Officer Andy Rendich says in a release, “We are thrilled to be expanding our partnership with Rexon, a leading Taiwanese manufacturer with over 50 years of experience. Rexon has been with Peloton for many years and is a proven partner for our global operations. We plan to maintain a significant corporate and manufacturing presence in Taiwan with over 100 Peloton Taiwan team members who continue to play a key role in our engineering and manufacturing strategy.”

It’s hard to see the move as anything but an about-face of its bullish pandemic plans. In May 2021, the company announced its intention to spend $400 million on a manufacturing facility. Earlier this year, however, it pulled the plug on the whole thing, amid widespread layoffs and an executive shakeup.

New CEO Barry McCarthy’s statement addresses the company’s ongoing push to get above water, noting:

Today we take another significant step in simplifying our supply chain and variablizing our cost structure – a key priority for us. We believe that this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility. Partnering with market-leading third party suppliers, Peloton will be able to focus on what we do best – using technology and content to help our seven million Members become the best versions of themselves.

In spite of its struggles, Peloton recently teased plans to introduce a rowing machine, which joins the also recently announced Guide, a set-top box that removes heavy equipment from the equation.