Struggling Peloton cancels plans for $400 million Ohio factory in bid to cut costs

Fitness company Peloton is canceling plans for a $400 million factory in Ohio as it desperately tries to cut costs as stock prices dip and demand plummets for its bikes and treadmills.

The company announced this week it is "winding down the development of its Peloton Output Park (POP) manufacturing plan," which includes the manufacturing plant planned to open in Luckey, Ohio. 

The company began construction last year on what would have been its first factory, but is now saying that the decision to cancel the plant will result in$60 million in restructuring capital expenditures.

The brand primarily known for its stationary bikes and workout classes is also cutting staff (roughly 2,800 employees were laid off this week) and slashing its in-house warehouse and delivery operations, opting instead to focus on third-party fulfillment vendors.

"While we won’t be able to ultimately occupy the property, overall we not only had the opportunity to highlight the talent and resources Troy Township offers, but we also invested approximately $100 million in the area," a company spokesperson told a local Ohio outlet. 

The factory was projected to create over 2,000 jobs for the area. Its cancelation is a disappointing blow to the post-industrial township.

Peloton stock rebounded slightly Tuesday after changes to the company's corporate structure became public, including the exit of CEO John Foley, who will assume the role of executive chairman. 

Restructuring efforts are projected to save the company. Last month, reports broke that Peloton was halting production of its workout machines due to a massive decline in demand, as the pandemic appears to be waning, at least now. 

The company initially pushed back against that reporting, which initially came from CNBC, but did say thy were "resetting" production goals for "sustainable growth."