Peloton Inc. announced February 8 it would change CEOs and downsize dramatically, cutting 2,800 employees and cancelling plans to build a factory for its exercise equipment in Western Ohio.
In a pair of statements, the company revealed plans to substantially downsize amid a reorganization of its executive board, including the replacement of co-founder John Foley as CEO. Foley will step down from his position to become Peloton’s Executive Chair, and he will be replaced as CEO by Barry McCarthy, a former Spotify executive.
The company, which manufactures high-end treadmills and exercise bikes, announced plans for Peloton Output Park in May 2021. The Troy Township, Ohio factory was expected to employ about 2,000 people and would have cost the company $400 million. Instead, Peloton expects the cancellation of the plans to cost $60 million in restructured capital expenditures.
The plant, which would have been located about 10 miles south of Toledo, Ohio, would have been the company’s first dedicated Peloton plant in the U.S. Peloton currently owns two Precor-brand exercise equipment plants in the United States—one in North Carolina, the other in Washington—but sources its treadmills and exercise bikes from factories in Taiwan.
Peloton had previously cited supply chain issues with sourcing bikes from Taiwan during the early period of the COVID-19 pandemic, when sales of at-home exercise equipment spiked.
Foley, in a statement, said the company is “at an important juncture” and that it would refocus on improving services for its subscription-based member service. The company gave away little on future plans for its hardware production, other than to say it would reduce its warehouse and delivery footprint and rely more on “third party relationships.”
According to a company statement, the 2,800 global company positions eliminated by the downsizing will not include instructors, who lead exercise classes remotely via the business’s subscriber service, but will include about 20% of corporate positions. The eliminated positions, Peloton says, will “streamline reporting structures and create clearer lines of accountability.”