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Peloton to invest $400M to build its first U.S. manufacturing facility in Ohio

206 points by jbredeche 5y ago

snypher 5y ago
Hooray, a million square feet of treadmill and exercise bike factory. Anyone care to guess what kickback or tax credit Ohio handed over for this? Edit: it was $47 million. See you all in 6 to 12 months when this goes the way of Foxconn.
- ericmay 5y ago
  The level of cynicism is concerning. But also (as an Ohio resident) there isn't really all that much in the way of incentives for a business to move here. The state has to do something. But this won't go the way of Foxconn - mark my words, because it's not nearly as complicated to set up. Like it or not, the future state for not just the world but individual states will be competition for jobs and revenue, so they're going to have to give companies a good reason to locate to their sovereignty. Tax advantages are a tool they can use (among other things), and unlike the federal government the state governments (at least Ohio) have to actually balance their budgets and spend somewhat responsibly - so they can't just do whatever they want and have to be strategic. Not collecting taxes is fine because if Peloton wouldn't locate here without that nothing is really being lost. At least there are jobs.
  - dghlsakjg 5y ago
    There's a lot of options that aren't "give corporations a $47mm handout". What if they put that money into better technical education facilities, or tax credits for Ohio residents paying off student loans. Increasing services so that people working remotely will want to come. I feel like a place with a low cost of living that attracts highly talented people for a variety of reasons is a better long term investment than a treadmill factory. If I was looking to open a satellite office, I can tell you that proximity to a treadmill factory is pretty low on the list. Tax breaks like this are tactical, state and city governments need to be strategic. While tactics like tax breaks can be part of a strategy, it doesn't seem to be a great one since it doesn't build "moats", and all it takes to be defeated is the next state over offering something slightly better. Ohio of all places should know that manufacturing facilities can be closed on short notice for reasons they have no control over.
    - ericmay 5y ago
      > What if they put that money into better technical education facilities, or tax credits for Ohio residents paying off student loans. Increasing services so that people working remotely will want to come. Well, a few issues. This is money that has to be collected and spent - more taxes or a change in the budget. Not collecting taxes on new construction isn't money the state has to spend, it's just money it isn't collecting. The alternative, at least in this case is that this factory just isn't built in Ohio. It wouldn't affect doing other things to attract residents. Frankly, I think we should create large-scale corporate subsidies to relocate jobs to the state. If you build your facility or office here, no corporate tax on that entity. More jobs and more money and revenue from other taxes will be enough. > I feel like a place with a low cost of living that attracts highly talented people for a variety of reasons is a better long term investment than a treadmill factory. Well, the cost of living isn't all that low, and where it is low no talented person without connections to the state wants to live here. Why live in Ohio when you have the exact same thing almost everywhere else in the country, from Oklahoma to Iowa, to Indiana to Michigan. There aren't many unique reasons to locate a business here, unfortunately. There are plenty of talented people here, though many leave for other locations. > If I was looking to open a satellite office, I can tell you that proximity to a treadmill factory is pretty low on the list. Sure, but you're also generally not opening a satellite office here unless you have a very good reason, and that reason would have nothing to do with the existence of a treadmill factory. In other words, Ohio is very low on your list, so if you have a reason for being here it's a very good one that this won't affect. > Tax breaks like this are tactical, state and city governments need to be strategic. While tactics like tax breaks can be part of a strategy, it doesn't seem to be a great one since it doesn't build "moats", and all it takes to be defeated is the next state over offering something slightly better. Ohio of all places should know that manufacturing facilities can be closed on short notice for reasons they have no control over. Yes. We should grow a coastline, build some mountains and ski resorts, and have great weather instead. I agree that state and city governments need to be strategic, but you're paining a mutually exclusive picture where one doesn't exist. Personally I think the only thing we can do is create walkable neighborhoods with mixed-use development - make Columbus, Cleveland, Cincinnati, and other towns and cities more like places in Europe where people would actually want to live. Otherwise Ohio is pretty indistinguishable from most of the country.
- Judgmentality 5y ago
  A company getting a tax break is not in the same league as what happened with Foxconn in Wisconsin. That was a truly special example of wild incompetence and corruption. https://gimletmedia.com/shows/reply-all/wbhjwd https://gimletmedia.com/shows/reply-all/wbhjwd https://www.theverge.com/2018/12/6/18128133/foxconn-deal-wisconsin-factory-mount-pleasant-trump-reply-all-sruthi-pinnamaneni https://www.theverge.com/2018/12/6/18128133/foxconn-deal-wis... This is just a company that actually wants to build what they're saying they'll build (at least I believe Peloton wants to build treadmills and exercise bikes because that's what they do, I have no idea why anyone would build a "state of the art" facility for a technology that's already been largely obsoleted as was the case with Foxconn and LCD screens) and hoping for a tax break.
- jacob2484 5y ago
  What's the alternative? A new facility is better than a facility outside the US.
  - catillac 5y ago
    It won’t happen here, but in the Foxconn case a better alternative would have been to not grant the incentives and “lose out” on Foxconn coming to Wisconsin.
    - ipaddr 5y ago
      Better for whom the tax payer?
      - catillac 5y ago
        Better for literally anyone by Foxconn, who made out lime a bandit at the expense of everyone else.
- Animats 5y ago
  US$24K per job is not too much. The upper limit for cost-effectiveness for job subsidies is maybe $30K. The main problem is making sure the benefits are not paid out until the jobs have been created.[1] [1] https://www.timesfreepress.com/news/local/story/2017/sep/17/costs-jobs-subsidies-success-secrecy/449257/ https://www.timesfreepress.com/news/local/story/2017/sep/17/...
fuzzer37 5y ago
Seriously, a million square feet to build stationary bikes with a screen attached? Does anyone have any predictions when this market will be saturated? It's not like exercise equipment is a recurring purchase.
- Closi 5y ago
  I suspect that your assumption that this facility is just to make stationary bikes might be a little off. Part of this investment is likely to be expansion of their product range.
- Grakel 5y ago
  This is like replacing a CRT with a high def flat screen. There's millions of them out there in gyms and schools and hotels, and these are WAY better.
- cl0ckt0wer 5y ago
  But you'll have to buy a new bike in a couple years when they stop updating the software on the old ones.
  - gregmac 5y ago
    As a consumer, this is the bit that drives me crazy about most of this stuff: a part with a lifecycle of a few years (CPU) is attached to a part with a long lifecycle (cycle, fridge, display/TV), thus making the whole thing effectively have the short lifecycle. I wish they'd use something like a Pi CM4 that could be upgraded at least once or twice over the 10+ year lifecycle, but I also understand why this will never happen.
- RankingMember 5y ago
  The service is the real product here - the equipment just helps with lock-in. They do seem to be spending the money in the right places- their instructors and production are second to none.
  - giglamesh 5y ago
baybal2 5y ago
$400M for a bicycle factory????? That's a lot of money... People in other countries can open a few car factories with money like that.
- Closi 5y ago
  A modern large car plant starts at $3bn-4bn then goes up from there depending on how much of the manufacturing you are going to do yourself, so it’s more like 10% of the cost of that.
  - caycep 5y ago
    I wonder if a lot of it is also going to supplier/worker infrastructure...Apple tried it in limited ways but I think a lot of it fell through due to, either US workers not having the right sort of technical education, vs. all the infrastructures for small parts, prototyping, etc, still being in China and the US factory was often stuck waiting for things to be shipped back
  - baybal2 5y ago
    Just two weeks ago, I've been in talks with a co who is in the process of building a car factory, and possibly a second one in a few years. And not of a OEM kit assembly type, but a proper on with body shop, and everything. Price? A bit more than $110M
    - Closi 5y ago
      Well clearly there is a large variety in size and scope, which is why I tried to say a “large” car plant (by which I meant reasonable complexity and manufacturing volume). Clearly you can open a very small car factory for $1 million with a body shop if you want to.
    - mediaman 5y ago
      There is no way you're building anything but a very small car factory for $110m. Maybe this involves a long of hand-work for low volume niche vehicles? Specialty government vehicles? Normal car factories run $500m for something smallish to $4bn for a facility with more volume.
alexaholic 5y ago
Will the new factory fix their treadmills? Re https://news.ycombinator.com/item?id=26846641 https://news.ycombinator.com/item?id=26846641
- tw04 5y ago
  As I said in that thread: there was never anything wrong with their treadmills. They function exactly like all of their competitors treadmills WRT: dangerous for pets and small children. On top of the safety key which was easily removable, they've now added a PIN on top - so if pulling out the magnetic key is too much effort you don't even have to do that.
  - ibero 5y ago
    In that very thread the top comment thread is specifically about the treadmills lacking a "guard or plastic covering on the bottom that stops the tread from pulling something underneath." that too me is something that would fall under a "factory fix."
    - tw04 5y ago
      Which was a silly suggestion, and if you look at their competitors (nordic track being the primary) - they have no such plastic guard. Their fix is a pin, you can return the treadmill if you don't like that option. The only thing that plastic guard will do is create a spot for clothing and fingers to get caught.
      - fastball 5y ago
        Yes, a plastic guard creates opportunities for catching fingers and clothing, but (unsurprisingly) people think this is preferable to their child's head getting caught in the treadmill[1]. A child was killed by one of these things. It is absolutely a massive design flaw that this treadmill lacks a protective guard and/or an automatic cutoff that triggers when it sees an unexpected level of resistance. You know, like if a child's head gets caught in it. [1] https://www.youtube.com/watch?v=onXNnlCYJ4Y https://www.youtube.com/watch?v=onXNnlCYJ4Y
tw04 5y ago
I find this thread fascinating. Everyone acknowledges we need solid manufacturing jobs to return to the US to help create more middle-class jobs. Peloton makes this announcement and it's nothing but sarcasm and snark. I can't tell if it's just responses from people that are all in Silcon Valley and completely oblivious to the plight of Midwest Americans, or people that are just being mean for the sake of being mean. So I'll say: kudos to you Peloton. Subsidy or not, providing some much-needed jobs to the Midwest. They could have just as easily setup the factory in Mexico to reduce labor costs, but didn't.
- MeinBlutIstBlau 5y ago
  Might I bring up the Foxconn factory in WI... As a midwesterner, I'll believe it when it's built. Otherwise to me it's just another means of washing bribe money somehow.
  - SQueeeeeL 5y ago
    I remember hearing the governor of WI so proud of "WisconValley" as he dubbed it. And it was all basically an elaborate tax scam by FoxConn which sucked up a bunch of tax money and basically evaporated.
    - missedthecue 5y ago
      Foxconn didn't get paid cash up front. The tax breaks are on earned income over the next several decades. They didn't earn any income. They didn't get any tax breaks. Yes, the state of Wisconsin sunk some money into infrastructure in the area, but that just means infrastructure got built in Wisconsin. That's not profit for Foxconn.
      - valleyer 5y ago
        Good points. So what did Foxconn gain? Or was it really just a slip-up?
        5y ago
mvzvm 5y ago
This is great. Really looking forward to learning more about this. I wonder how automated it will be.
conk 5y ago
I’m surprised they don’t already have a North America facility for final assembly. The idea of shipping finishes treadmills and exercise bikes just seems impractical and expensive.
- JoblessWonder 5y ago
  FWIW, they don't ship finished bikes or treadmills to customers. There is a final "assembly" that takes place in the owner's home. Just putting the pieces together, nothing too intense and lasts maybe 30 minutes. I got mine before COVID, but I know that it was a big to-do during COVID because everyone wanted a bike but people didn't want strangers coming in to their houses to install them. (Understandable at the time.)
- jdeibele 5y ago
  My wife ordered an electric bike about a year ago from Strom/Stroem and it finally showed up a couple of weeks ago. I did the "final assembly", which was attaching the handlebars and front wheel. The hardest part was putting a plastic cover over the 5 cables on the downtime. That took two people, one to hold the cables while the other snapped the cover in place. The bike was designed in Denmark but the box came from Thailand. I would guess that ocean shipping for Peloton from China to Los Angeles or Long Beach and then truck or rail from there to Portland is slightly cheaper than just truck or rail from Ohio but probably not enough to matter. I'd never tried an electric bike before. I can see why people use them instead of cars. It's pretty awesome.
  - kawsper 5y ago
    I am not sure if you know this but Strøm means current in danish, and it most often refers to electric current.
- asdff 5y ago
  Most bikes you buy online are like this. The bike shop puts it together for you.
intricatedetail 5y ago
We need country of origin information on products along with some colour coding, e.g. if given country has minimum wage, slave Labour etc. If product contains parts and labour from many countries then all should be listed ordered by level of participation.
- barbazoo 5y ago
  I'd support that. Regarding country of origin, doesn't every product have a "Made in ..." on it and it's packaging? I'm only familiar with Europe and Canada though.
  - halostatue 5y ago
    This is inconsistent. In Canada, at least, “Made in Canada” or “Produced in Canada” does not necessarily mean “made mostly in Canada from Canadian parts”. All that’s necessary is a certain percentage of assembly or preparation (for foods). I’m not sure of the _exact_ proportions required, but I first noticed this on food products (“Prepared in Canada from domestic and foreign ingredients” is frequently found on foods I buy).
  - intricatedetail 5y ago
    I've seen products "made in USA" where they get preassembled product from China and only load firmware and put a sticker with serial number. Insane.
    - supertrope 5y ago
      Screwdriver shops. Italy restricted "Made in Italy" to products with 2/3 of critical steps done domestically.
- 8ytecoder 5y ago
  Not nearly enough to change behaviour. I knew fully well the impact of buying A vs B in a recent purchase decision - A is unethical but B was a full $1000 more. It was hard to suck it up and do the right thing. If we want to effect change, just add a tax that equalizes unfair advantages - paying unliveable wage? That tax should then be used to pay a basic income here. If manufacturers still want to keep their facilities elsewhere - for non-destructive reasons - so be it.
legitster 5y ago
My understanding from talking to industrial engineers is that American manufacturing is quite competitive when the product is consistent. It's when you work in batches or need to make constant adjustments to the line or product (very labor intensive activities) that it gets prohibitively expensive. It makes sense that Peloton foresees many, many years of sales without needing to update their hardware much.
- OldHand2018 5y ago
  I know some people that run a number of small manufacturing sites spread across the US. When they get something tricky, they send it to their factory in (to avoid flame wars) State A, which happens to spend more per student than the national average. Line workers have the freedom to experiment and improve the process until they have something very good, and then they move the line to their factory in State B, which happens to spend significantly less per student than the national average. Probably just a coincidence though. PS - 2020 was their best year ever and 2021 could be even better. People are currently willing to pay American rates to avoid supply chain risk. PPS - Ohio is a great location for Peloton. I bet they can get 70-80% of their product by value from supply manufacturers just within the state. Expand to Michigan and Indiana and you might be at 85 or 90%. This is in the Toledo metro area which already has a large auto manufacturing supply chain, as well as PV panel production. They’ve got plenty of workers and suppliers to draw from.
  - gogopuppygogo 5y ago
    Ohio also has some beautiful areas you can enjoy nature in and low cost of living. It’s the winters that get you.
    - halfmatthalfcat 5y ago
      Same could be said for anywhere in the Midwest tbh
      - deleted 5y ago
        [deleted]
Theodores 5y ago
I am impressed that they have turned a low volume product in the cycle trade into a cash cow. Their products get used and were much loved during lockdown. But do they sell in the Netherlands? Point being that exercise can be built into your life, cycling to work, the shops or to see friends and family. As much as I am impressed by the Peloton product, here I am right now in a nature reserve with ample birdsong, having taken 45 minutes to get here by foot with my flask and phone. I am not likely to buy their products, my real bicycle cost a fraction of a treadmill and it actually gets me from A to B as do my boots. There is something wrong when mankind is buying SUVs and these glorified hamster wheels. I only saw a few regular dog walkers on my stroll today but they are neighbours and I said hello. I don't want a virtual hello on a hamster wheel, thanks.
- RC_ITR 5y ago
  Hey - if you really are where you say you are, put down your phone and disconnect for a bit.
  - Theodores 5y ago
    On this platform you are not supposed to write condescending comments like this, are you? This is what irritates me about this platform. So I work hard all day, go for a stroll up a very big hill, sit down with my flask and phone to read the news, but, due to low bandwidth, bother with this silly website for a few minutes. To get petty comments about putting my phone down for a bit! I think you over assumed.
    - RC_ITR 5y ago
      >There is something wrong when mankind is buying SUVs and these glorified hamster wheels. Bro, pick a side...
- gamblor956 5y ago
  Peloton sold well during the pandemic precisely because people couldn't cycle to work, or go to shops, or the gym, or see friends and family. Moreover, having a Peloton does not conflict with also going outside for exercise; most of the Peloton users I know engage in outdoor activities like (trail) running and mountain biking and have the machine because it's convenient to just hop on whenever. There is something wrong when a man thinks that a slow stroll through a nature reserve constitutes anything even remotely close to the type of exercise one gets in a cycling class.
TimPC 5y ago
Removed by poster. Comment had out of date information.
- aspir 5y ago
  Is that what they already did? https://www.nytimes.com/2021/05/05/business/peloton-recall-tread-plus.html https://www.nytimes.com/2021/05/05/business/peloton-recall-t...
  - TimPC 5y ago
    Thanks I missed the news they finally did this.
- ojbyrne 5y ago
  Isn't that what this is: https://www.cpsc.gov/Recalls/2021/peloton-recalls-tread-plus-treadmills-after-one-child-died-and-more-than-70-incidents https://www.cpsc.gov/Recalls/2021/peloton-recalls-tread-plus...
ydnaclementine 5y ago
Shoutout to Ohio! Interesting they chose Troy Township (population 4k), wonder if they plan on employing the entire city. I'm unfortunately a little skeptical, but I hope it works for the city/state and Peloton. If you find the idea of new plants opening in the US interesting, I recommend the documentary American Factory. It is about a plant owned by a Chinese company opening in Ohio (Dayton), so the circumstances are completely different from this. It explores the clash of cultures and conflict of attitudes of the employers and employees. I liked how they dove into some employees and employers lives and circumstances. I thought it was interesting, but I'm a little biased because I happened to be living near Dayton when it was filmed, and had no clue this type of thing was going on.
- abnercoimbre 5y ago
  I don't know if this does anything for you, but American Factory was actually produced by the Obamas. Their first Netflix documentary. Politics aside, I thought that was a pretty neat tidbit.
- newhotelowner 5y ago
  > wonder if they plan on employing the entire city. Population of Miami county is 100k. People in this part of the country travel 30-45 miles to work. https://www.google.com/search?q=miami+county+population https://www.google.com/search?q=miami+county+population They always talk about upto x number of jobs. Actual numbers are usually lower. There are close to hundred Japanese companies/factories in Ohio.
  - imroot 5y ago
    I thought this was up in Troy Township (Wood County), not in Troy (the city, in Miami county).
- baybal2 5y ago
  > Shoutout to Ohio! Interesting they chose Troy Township (population 4k), wonder if they plan on employing the entire city. I bet no, and I bet they also went trying the cumbersome robotisation route yet again.
aynyc 5y ago
$400 million 1 million square feet more than 2,000 jobs Given how much automation is used in modern factory, I'm surprised it'll create that many jobs. Given the products are fairly consistent, wouldn't the production lines be robots?
- jcrawfordor 5y ago
  Extensive production automation is really expensive. You'd probably be surprised how much electronics and consumer goods manufacturing is still largely manual. In particular, high automation gets you into pretty extreme retooling costs whenever you change your designs.
  - baybal2 5y ago
    If feel you know what you are saying. People saying automation will save American manufacturing have zero experience with real manufacturing.
    - bluGill 5y ago
      There has been a large amount of automation that most people don't think of much anymore . Factories that used to employ thousands in the 1950s now only have hundreds. Assembly might be manual, but cutting is all automated. The factory I work in got rid of 200 employees just by getting Lazar cutters for sheet steel. And many other machines.
- underwater 5y ago
  They usually fudge the numbers for number of jobs badly. For example you might find that construction requires 1,500 different people for varying lengths of time, and the factory employs 500 people on an ongoing basis.
  - aynyc 5y ago
    That’s more inline from what I’ve read but is that true in general?
azinman2 5y ago
> “We believe that working out at home is the future,” the CEO said. “That is why we’re investing in this facility.” Is it really going to be that much bigger post Covid? It’s not like home gyms have never been thought of before, or there’s something new that happened that Peleton didn’t already have in 2019. Sure Peleton has features that make it feel like you’re connected to a larger community. But ultimately many people want the actual ability to talk to the instructor, or feel the energy from others in the class (eg why live music/comedy cannot be replicated), or build bonds and social relationships with others. Those that don’t care about these things already would have worked out at home before. Sure maybe some bought this equipment during Covid, but that doesn’t mean it all of the sudden becomes “the future of working out.”
- cyrux004 5y ago
  Cancelled my peloton fitness subscription today and back to gym (Orange theory). Havent used my home treadmill for a few weeks back. Its hard to stay motivated at home for long stretches.
  - deleted 5y ago
    [deleted]
- dillondoyle 5y ago
  I have been surprised how strong the Peloton online community is. I have more than one friend who's life has been basically taken over, like Cross fitters can be. It's all she posts on Instagram! Have their own group, organize rides with custom t shirts and everything. Actually did a meet up in person from across the country. I think she does interact with her favorite instructor off the platform too. Seems more personal than like a large brand spin class. Who knows maybe they make some in person gyms, like a bike-share program, since the bikes are so expensive. But I am for sure in the category of building an intense home gym that I don't use as much as I should given the cost ;)
aml183 5y ago
If you want to learn more about tech in Ohio. Check out OhioX. It is the trade association for the technology community in Ohio. They are doing some great work on trying to attract and retain tech talent in the region. https://www.ohiox.org/ https://www.ohiox.org/
skizm 5y ago
A lot of Fitness equipment seems to be manufactured domestically. Is that because shipping overseas is expensive for heavy things?
davidkuhta 5y ago
As long as Peloton steers clear of building any yogurt factories in Ohio, I'm all for it.

206 points by jbredeche 5y ago

Hooray, a million square feet of treadmill and exercise bike factory. Anyone care to guess what kickback or tax credit Ohio handed over for this? Edit: it was $47 million. See you all in 6 to 12 months when this goes the way of Foxconn.

ericmay 5y ago
The level of cynicism is concerning. But also (as an Ohio resident) there isn't really all that much in the way of incentives for a business to move here. The state has to do something. But this won't go the way of Foxconn - mark my words, because it's not nearly as complicated to set up. Like it or not, the future state for not just the world but individual states will be competition for jobs and revenue, so they're going to have to give companies a good reason to locate to their sovereignty. Tax advantages are a tool they can use (among other things), and unlike the federal government the state governments (at least Ohio) have to actually balance their budgets and spend somewhat responsibly - so they can't just do whatever they want and have to be strategic. Not collecting taxes is fine because if Peloton wouldn't locate here without that nothing is really being lost. At least there are jobs.
- dghlsakjg 5y ago
  There's a lot of options that aren't "give corporations a $47mm handout". What if they put that money into better technical education facilities, or tax credits for Ohio residents paying off student loans. Increasing services so that people working remotely will want to come. I feel like a place with a low cost of living that attracts highly talented people for a variety of reasons is a better long term investment than a treadmill factory. If I was looking to open a satellite office, I can tell you that proximity to a treadmill factory is pretty low on the list. Tax breaks like this are tactical, state and city governments need to be strategic. While tactics like tax breaks can be part of a strategy, it doesn't seem to be a great one since it doesn't build "moats", and all it takes to be defeated is the next state over offering something slightly better. Ohio of all places should know that manufacturing facilities can be closed on short notice for reasons they have no control over.
  - ericmay 5y ago
    > What if they put that money into better technical education facilities, or tax credits for Ohio residents paying off student loans. Increasing services so that people working remotely will want to come. Well, a few issues. This is money that has to be collected and spent - more taxes or a change in the budget. Not collecting taxes on new construction isn't money the state has to spend, it's just money it isn't collecting. The alternative, at least in this case is that this factory just isn't built in Ohio. It wouldn't affect doing other things to attract residents. Frankly, I think we should create large-scale corporate subsidies to relocate jobs to the state. If you build your facility or office here, no corporate tax on that entity. More jobs and more money and revenue from other taxes will be enough. > I feel like a place with a low cost of living that attracts highly talented people for a variety of reasons is a better long term investment than a treadmill factory. Well, the cost of living isn't all that low, and where it is low no talented person without connections to the state wants to live here. Why live in Ohio when you have the exact same thing almost everywhere else in the country, from Oklahoma to Iowa, to Indiana to Michigan. There aren't many unique reasons to locate a business here, unfortunately. There are plenty of talented people here, though many leave for other locations. > If I was looking to open a satellite office, I can tell you that proximity to a treadmill factory is pretty low on the list. Sure, but you're also generally not opening a satellite office here unless you have a very good reason, and that reason would have nothing to do with the existence of a treadmill factory. In other words, Ohio is very low on your list, so if you have a reason for being here it's a very good one that this won't affect. > Tax breaks like this are tactical, state and city governments need to be strategic. While tactics like tax breaks can be part of a strategy, it doesn't seem to be a great one since it doesn't build "moats", and all it takes to be defeated is the next state over offering something slightly better. Ohio of all places should know that manufacturing facilities can be closed on short notice for reasons they have no control over. Yes. We should grow a coastline, build some mountains and ski resorts, and have great weather instead. I agree that state and city governments need to be strategic, but you're paining a mutually exclusive picture where one doesn't exist. Personally I think the only thing we can do is create walkable neighborhoods with mixed-use development - make Columbus, Cleveland, Cincinnati, and other towns and cities more like places in Europe where people would actually want to live. Otherwise Ohio is pretty indistinguishable from most of the country.
Judgmentality 5y ago
A company getting a tax break is not in the same league as what happened with Foxconn in Wisconsin. That was a truly special example of wild incompetence and corruption. https://gimletmedia.com/shows/reply-all/wbhjwd https://gimletmedia.com/shows/reply-all/wbhjwd https://www.theverge.com/2018/12/6/18128133/foxconn-deal-wisconsin-factory-mount-pleasant-trump-reply-all-sruthi-pinnamaneni https://www.theverge.com/2018/12/6/18128133/foxconn-deal-wis... This is just a company that actually wants to build what they're saying they'll build (at least I believe Peloton wants to build treadmills and exercise bikes because that's what they do, I have no idea why anyone would build a "state of the art" facility for a technology that's already been largely obsoleted as was the case with Foxconn and LCD screens) and hoping for a tax break.
jacob2484 5y ago
What's the alternative? A new facility is better than a facility outside the US.
- catillac 5y ago
  It won’t happen here, but in the Foxconn case a better alternative would have been to not grant the incentives and “lose out” on Foxconn coming to Wisconsin.
  - ipaddr 5y ago
    Better for whom the tax payer?
    - catillac 5y ago
      Better for literally anyone by Foxconn, who made out lime a bandit at the expense of everyone else.
Animats 5y ago
US$24K per job is not too much. The upper limit for cost-effectiveness for job subsidies is maybe $30K. The main problem is making sure the benefits are not paid out until the jobs have been created.[1] [1] https://www.timesfreepress.com/news/local/story/2017/sep/17/costs-jobs-subsidies-success-secrecy/449257/ https://www.timesfreepress.com/news/local/story/2017/sep/17/...

fuzzer37 5y ago

Seriously, a million square feet to build stationary bikes with a screen attached? Does anyone have any predictions when this market will be saturated? It's not like exercise equipment is a recurring purchase.

Closi 5y ago
I suspect that your assumption that this facility is just to make stationary bikes might be a little off. Part of this investment is likely to be expansion of their product range.
Grakel 5y ago
This is like replacing a CRT with a high def flat screen. There's millions of them out there in gyms and schools and hotels, and these are WAY better.
cl0ckt0wer 5y ago
But you'll have to buy a new bike in a couple years when they stop updating the software on the old ones.
- gregmac 5y ago
  As a consumer, this is the bit that drives me crazy about most of this stuff: a part with a lifecycle of a few years (CPU) is attached to a part with a long lifecycle (cycle, fridge, display/TV), thus making the whole thing effectively have the short lifecycle. I wish they'd use something like a Pi CM4 that could be upgraded at least once or twice over the 10+ year lifecycle, but I also understand why this will never happen.
RankingMember 5y ago
The service is the real product here - the equipment just helps with lock-in. They do seem to be spending the money in the right places- their instructors and production are second to none.
- giglamesh 5y ago

baybal2 5y ago

$400M for a bicycle factory????? That's a lot of money... People in other countries can open a few car factories with money like that.

Closi 5y ago
A modern large car plant starts at $3bn-4bn then goes up from there depending on how much of the manufacturing you are going to do yourself, so it’s more like 10% of the cost of that.
- caycep 5y ago
  I wonder if a lot of it is also going to supplier/worker infrastructure...Apple tried it in limited ways but I think a lot of it fell through due to, either US workers not having the right sort of technical education, vs. all the infrastructures for small parts, prototyping, etc, still being in China and the US factory was often stuck waiting for things to be shipped back
- baybal2 5y ago
  Just two weeks ago, I've been in talks with a co who is in the process of building a car factory, and possibly a second one in a few years. And not of a OEM kit assembly type, but a proper on with body shop, and everything. Price? A bit more than $110M
  - Closi 5y ago
    Well clearly there is a large variety in size and scope, which is why I tried to say a “large” car plant (by which I meant reasonable complexity and manufacturing volume). Clearly you can open a very small car factory for $1 million with a body shop if you want to.
  - mediaman 5y ago
    There is no way you're building anything but a very small car factory for $110m. Maybe this involves a long of hand-work for low volume niche vehicles? Specialty government vehicles? Normal car factories run $500m for something smallish to $4bn for a facility with more volume.

alexaholic 5y ago

Will the new factory fix their treadmills? Re https://news.ycombinator.com/item?id=26846641 https://news.ycombinator.com/item?id=26846641

tw04 5y ago
As I said in that thread: there was never anything wrong with their treadmills. They function exactly like all of their competitors treadmills WRT: dangerous for pets and small children. On top of the safety key which was easily removable, they've now added a PIN on top - so if pulling out the magnetic key is too much effort you don't even have to do that.
- ibero 5y ago
  In that very thread the top comment thread is specifically about the treadmills lacking a "guard or plastic covering on the bottom that stops the tread from pulling something underneath." that too me is something that would fall under a "factory fix."
  - tw04 5y ago
    Which was a silly suggestion, and if you look at their competitors (nordic track being the primary) - they have no such plastic guard. Their fix is a pin, you can return the treadmill if you don't like that option. The only thing that plastic guard will do is create a spot for clothing and fingers to get caught.
    - fastball 5y ago
      Yes, a plastic guard creates opportunities for catching fingers and clothing, but (unsurprisingly) people think this is preferable to their child's head getting caught in the treadmill[1]. A child was killed by one of these things. It is absolutely a massive design flaw that this treadmill lacks a protective guard and/or an automatic cutoff that triggers when it sees an unexpected level of resistance. You know, like if a child's head gets caught in it. [1] https://www.youtube.com/watch?v=onXNnlCYJ4Y https://www.youtube.com/watch?v=onXNnlCYJ4Y

tw04 5y ago

I find this thread fascinating. Everyone acknowledges we need solid manufacturing jobs to return to the US to help create more middle-class jobs. Peloton makes this announcement and it's nothing but sarcasm and snark. I can't tell if it's just responses from people that are all in Silcon Valley and completely oblivious to the plight of Midwest Americans, or people that are just being mean for the sake of being mean. So I'll say: kudos to you Peloton. Subsidy or not, providing some much-needed jobs to the Midwest. They could have just as easily setup the factory in Mexico to reduce labor costs, but didn't.

MeinBlutIstBlau 5y ago
Might I bring up the Foxconn factory in WI... As a midwesterner, I'll believe it when it's built. Otherwise to me it's just another means of washing bribe money somehow.
- SQueeeeeL 5y ago
  I remember hearing the governor of WI so proud of "WisconValley" as he dubbed it. And it was all basically an elaborate tax scam by FoxConn which sucked up a bunch of tax money and basically evaporated.
  - missedthecue 5y ago
    Foxconn didn't get paid cash up front. The tax breaks are on earned income over the next several decades. They didn't earn any income. They didn't get any tax breaks. Yes, the state of Wisconsin sunk some money into infrastructure in the area, but that just means infrastructure got built in Wisconsin. That's not profit for Foxconn.
    - valleyer 5y ago
      Good points. So what did Foxconn gain? Or was it really just a slip-up?
      - 5y ago

mvzvm 5y ago

This is great. Really looking forward to learning more about this. I wonder how automated it will be.

conk 5y ago

I’m surprised they don’t already have a North America facility for final assembly. The idea of shipping finishes treadmills and exercise bikes just seems impractical and expensive.

JoblessWonder 5y ago
FWIW, they don't ship finished bikes or treadmills to customers. There is a final "assembly" that takes place in the owner's home. Just putting the pieces together, nothing too intense and lasts maybe 30 minutes. I got mine before COVID, but I know that it was a big to-do during COVID because everyone wanted a bike but people didn't want strangers coming in to their houses to install them. (Understandable at the time.)
jdeibele 5y ago
My wife ordered an electric bike about a year ago from Strom/Stroem and it finally showed up a couple of weeks ago. I did the "final assembly", which was attaching the handlebars and front wheel. The hardest part was putting a plastic cover over the 5 cables on the downtime. That took two people, one to hold the cables while the other snapped the cover in place. The bike was designed in Denmark but the box came from Thailand. I would guess that ocean shipping for Peloton from China to Los Angeles or Long Beach and then truck or rail from there to Portland is slightly cheaper than just truck or rail from Ohio but probably not enough to matter. I'd never tried an electric bike before. I can see why people use them instead of cars. It's pretty awesome.
- kawsper 5y ago
  I am not sure if you know this but Strøm means current in danish, and it most often refers to electric current.
asdff 5y ago
Most bikes you buy online are like this. The bike shop puts it together for you.

intricatedetail 5y ago

We need country of origin information on products along with some colour coding, e.g. if given country has minimum wage, slave Labour etc. If product contains parts and labour from many countries then all should be listed ordered by level of participation.

barbazoo 5y ago
I'd support that. Regarding country of origin, doesn't every product have a "Made in ..." on it and it's packaging? I'm only familiar with Europe and Canada though.
- halostatue 5y ago
  This is inconsistent. In Canada, at least, “Made in Canada” or “Produced in Canada” does not necessarily mean “made mostly in Canada from Canadian parts”. All that’s necessary is a certain percentage of assembly or preparation (for foods). I’m not sure of the _exact_ proportions required, but I first noticed this on food products (“Prepared in Canada from domestic and foreign ingredients” is frequently found on foods I buy).
- intricatedetail 5y ago
  I've seen products "made in USA" where they get preassembled product from China and only load firmware and put a sticker with serial number. Insane.
  - supertrope 5y ago
    Screwdriver shops. Italy restricted "Made in Italy" to products with 2/3 of critical steps done domestically.
8ytecoder 5y ago
Not nearly enough to change behaviour. I knew fully well the impact of buying A vs B in a recent purchase decision - A is unethical but B was a full $1000 more. It was hard to suck it up and do the right thing. If we want to effect change, just add a tax that equalizes unfair advantages - paying unliveable wage? That tax should then be used to pay a basic income here. If manufacturers still want to keep their facilities elsewhere - for non-destructive reasons - so be it.

legitster 5y ago

My understanding from talking to industrial engineers is that American manufacturing is quite competitive when the product is consistent. It's when you work in batches or need to make constant adjustments to the line or product (very labor intensive activities) that it gets prohibitively expensive. It makes sense that Peloton foresees many, many years of sales without needing to update their hardware much.

OldHand2018 5y ago
I know some people that run a number of small manufacturing sites spread across the US. When they get something tricky, they send it to their factory in (to avoid flame wars) State A, which happens to spend more per student than the national average. Line workers have the freedom to experiment and improve the process until they have something very good, and then they move the line to their factory in State B, which happens to spend significantly less per student than the national average. Probably just a coincidence though. PS - 2020 was their best year ever and 2021 could be even better. People are currently willing to pay American rates to avoid supply chain risk. PPS - Ohio is a great location for Peloton. I bet they can get 70-80% of their product by value from supply manufacturers just within the state. Expand to Michigan and Indiana and you might be at 85 or 90%. This is in the Toledo metro area which already has a large auto manufacturing supply chain, as well as PV panel production. They’ve got plenty of workers and suppliers to draw from.
- gogopuppygogo 5y ago
  Ohio also has some beautiful areas you can enjoy nature in and low cost of living. It’s the winters that get you.
  - halfmatthalfcat 5y ago
    Same could be said for anywhere in the Midwest tbh
    - deleted 5y ago
      [deleted]

Theodores 5y ago

I am impressed that they have turned a low volume product in the cycle trade into a cash cow. Their products get used and were much loved during lockdown. But do they sell in the Netherlands? Point being that exercise can be built into your life, cycling to work, the shops or to see friends and family. As much as I am impressed by the Peloton product, here I am right now in a nature reserve with ample birdsong, having taken 45 minutes to get here by foot with my flask and phone. I am not likely to buy their products, my real bicycle cost a fraction of a treadmill and it actually gets me from A to B as do my boots. There is something wrong when mankind is buying SUVs and these glorified hamster wheels. I only saw a few regular dog walkers on my stroll today but they are neighbours and I said hello. I don't want a virtual hello on a hamster wheel, thanks.

RC_ITR 5y ago
Hey - if you really are where you say you are, put down your phone and disconnect for a bit.
- Theodores 5y ago
  On this platform you are not supposed to write condescending comments like this, are you? This is what irritates me about this platform. So I work hard all day, go for a stroll up a very big hill, sit down with my flask and phone to read the news, but, due to low bandwidth, bother with this silly website for a few minutes. To get petty comments about putting my phone down for a bit! I think you over assumed.
  - RC_ITR 5y ago
    >There is something wrong when mankind is buying SUVs and these glorified hamster wheels. Bro, pick a side...
gamblor956 5y ago
Peloton sold well during the pandemic precisely because people couldn't cycle to work, or go to shops, or the gym, or see friends and family. Moreover, having a Peloton does not conflict with also going outside for exercise; most of the Peloton users I know engage in outdoor activities like (trail) running and mountain biking and have the machine because it's convenient to just hop on whenever. There is something wrong when a man thinks that a slow stroll through a nature reserve constitutes anything even remotely close to the type of exercise one gets in a cycling class.

TimPC 5y ago

Removed by poster. Comment had out of date information.

aspir 5y ago
Is that what they already did? https://www.nytimes.com/2021/05/05/business/peloton-recall-tread-plus.html https://www.nytimes.com/2021/05/05/business/peloton-recall-t...
- TimPC 5y ago
  Thanks I missed the news they finally did this.
ojbyrne 5y ago
Isn't that what this is: https://www.cpsc.gov/Recalls/2021/peloton-recalls-tread-plus-treadmills-after-one-child-died-and-more-than-70-incidents https://www.cpsc.gov/Recalls/2021/peloton-recalls-tread-plus...

ydnaclementine 5y ago

Shoutout to Ohio! Interesting they chose Troy Township (population 4k), wonder if they plan on employing the entire city. I'm unfortunately a little skeptical, but I hope it works for the city/state and Peloton. If you find the idea of new plants opening in the US interesting, I recommend the documentary American Factory. It is about a plant owned by a Chinese company opening in Ohio (Dayton), so the circumstances are completely different from this. It explores the clash of cultures and conflict of attitudes of the employers and employees. I liked how they dove into some employees and employers lives and circumstances. I thought it was interesting, but I'm a little biased because I happened to be living near Dayton when it was filmed, and had no clue this type of thing was going on.

abnercoimbre 5y ago
I don't know if this does anything for you, but American Factory was actually produced by the Obamas. Their first Netflix documentary. Politics aside, I thought that was a pretty neat tidbit.
newhotelowner 5y ago
> wonder if they plan on employing the entire city. Population of Miami county is 100k. People in this part of the country travel 30-45 miles to work. https://www.google.com/search?q=miami+county+population https://www.google.com/search?q=miami+county+population They always talk about upto x number of jobs. Actual numbers are usually lower. There are close to hundred Japanese companies/factories in Ohio.
- imroot 5y ago
  I thought this was up in Troy Township (Wood County), not in Troy (the city, in Miami county).
baybal2 5y ago
> Shoutout to Ohio! Interesting they chose Troy Township (population 4k), wonder if they plan on employing the entire city. I bet no, and I bet they also went trying the cumbersome robotisation route yet again.

aynyc 5y ago

$400 million 1 million square feet more than 2,000 jobs Given how much automation is used in modern factory, I'm surprised it'll create that many jobs. Given the products are fairly consistent, wouldn't the production lines be robots?

jcrawfordor 5y ago
Extensive production automation is really expensive. You'd probably be surprised how much electronics and consumer goods manufacturing is still largely manual. In particular, high automation gets you into pretty extreme retooling costs whenever you change your designs.
- baybal2 5y ago
  If feel you know what you are saying. People saying automation will save American manufacturing have zero experience with real manufacturing.
  - bluGill 5y ago
    There has been a large amount of automation that most people don't think of much anymore . Factories that used to employ thousands in the 1950s now only have hundreds. Assembly might be manual, but cutting is all automated. The factory I work in got rid of 200 employees just by getting Lazar cutters for sheet steel. And many other machines.
underwater 5y ago
They usually fudge the numbers for number of jobs badly. For example you might find that construction requires 1,500 different people for varying lengths of time, and the factory employs 500 people on an ongoing basis.
- aynyc 5y ago
  That’s more inline from what I’ve read but is that true in general?

azinman2 5y ago

> “We believe that working out at home is the future,” the CEO said. “That is why we’re investing in this facility.” Is it really going to be that much bigger post Covid? It’s not like home gyms have never been thought of before, or there’s something new that happened that Peleton didn’t already have in 2019. Sure Peleton has features that make it feel like you’re connected to a larger community. But ultimately many people want the actual ability to talk to the instructor, or feel the energy from others in the class (eg why live music/comedy cannot be replicated), or build bonds and social relationships with others. Those that don’t care about these things already would have worked out at home before. Sure maybe some bought this equipment during Covid, but that doesn’t mean it all of the sudden becomes “the future of working out.”

cyrux004 5y ago
Cancelled my peloton fitness subscription today and back to gym (Orange theory). Havent used my home treadmill for a few weeks back. Its hard to stay motivated at home for long stretches.
- deleted 5y ago
  [deleted]
dillondoyle 5y ago
I have been surprised how strong the Peloton online community is. I have more than one friend who's life has been basically taken over, like Cross fitters can be. It's all she posts on Instagram! Have their own group, organize rides with custom t shirts and everything. Actually did a meet up in person from across the country. I think she does interact with her favorite instructor off the platform too. Seems more personal than like a large brand spin class. Who knows maybe they make some in person gyms, like a bike-share program, since the bikes are so expensive. But I am for sure in the category of building an intense home gym that I don't use as much as I should given the cost ;)

aml183 5y ago

If you want to learn more about tech in Ohio. Check out OhioX. It is the trade association for the technology community in Ohio. They are doing some great work on trying to attract and retain tech talent in the region. https://www.ohiox.org/ https://www.ohiox.org/

skizm 5y ago

A lot of Fitness equipment seems to be manufactured domestically. Is that because shipping overseas is expensive for heavy things?

davidkuhta 5y ago

As long as Peloton steers clear of building any yogurt factories in Ohio, I'm all for it.