Peloton Interactive (NASDAQ:PTON) announced today that it will build a new manufacturing facility in Troy Township, Ohio. The $400 million investment will be the company’s first dedicated domestic site, and is intended to continue to help resolve long delivery delay times.
Peloton completed its acquisition of Precor earlier this year, which brought it into the market for commercial fitness equipment customers and gave it access to two U.S. manufacturing plants. In the company’s fiscal second-quarter 2021 financial release, Peloton said, “we will be incrementally investing over $100 million in air freight and expedited ocean freight over the next six months in order to improve our order-to-delivery windows.” Today’s announcement is the latest step toward that goal.
Peloton continues to ramp up production at a new production facility in Taiwan, and said today that it will continue to invest in its Asian manufacturing footprint. But even with that new plant, the company said in its fiscal third-quarter update in May that “well-publicized West Coast port delays and COVID-related factors continue to present challenges to returning our delivery times to pre-pandemic levels.”
Peloton said the investment in the U.S. plant will shift a large portion of its manufacturing to the U.S., and create “a massive strategic lever to make sure we have capacity, quality, and economies of scale in our bike and tread product lines.” The company added that it will also add investment to its Precor U.S. sites as it plans to support years of future growth.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.