Peloton said Monday it will invest $400 million to build its first factory in the United States to speed up production and delivery of its popular cycles and high-end treadmill machines.
After vetting a number of locations, it selected a 200-acre site in Troy Township in Wood County, Ohio, to construct more than 1 million square feet of manufacturing, office and amenities space, the company said.
Peloton expects to break ground later this summer on the project, which should bring more than 2,000 jobs to the area. The facility should be up and running by 2023.
"We had planned to do this for years, but I think the pandemic put an exclamation point on why it's going to be awesome," Peloton co-founder and CEO John Foley said in an interview. "Having more flexibility in running a global supply chain is also going to allow us to sleep better, as you can imagine."
The at-home fitness company currently manufactures its products at third-party facilities in Asia. Faced with heightened consumer demand during the Covid pandemic, it has run into lengthened delivery delays that have frustrated consumers and investors. In February, it said it would spend more than $100 million to speed up shipments using air and expedited ocean freight.
It also acquired fitness manufacturer Precor for $420 million, gaining manufacturing facilities in North Carolina and Washington. Peloton expects to make its Bike and Tread machines in these factories by the end of the year.
Potential customers will be able to visit the Ohio facility to view its products or schedule tours to see the cycles and treadmills being made, the company said. The site will also have a fitness center for its workers.
According to Foley, the extra space also means Peloton will have room to manufacture additional products in the years ahead.
Earlier this month, Peloton recalled both of its treadmill machines over safety concerns. The company's less-expensive model, the Tread, had been slated to go on sale in the U.S. this week, but the launch was delayed to add new safety features, which could come as soon as this summer.
Meanwhile, Peloton continues to market its Bike and Bike+, which features a rotating screen for floor exercises, to consumers looking for ways to break a sweat at home. Pushing into new markets, Peloton will launch in Australia later this year.
In the quarter ended March 31, Peloton's total revenue surged 141% to $1.26 billion from $524.6 million a year earlier. Peloton expects sales in its current quarter to be $915 million.
"We believe that working out at home is the future," the CEO said. "That is why we're investing in this facility."
Peloton shares were falling more than 1% Monday afternoon, having dropped about 35% year to date. The company has a market cap of $30 billion.
— CNBC's Diana Olick contributed to this reporting.
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