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.
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.
It was actually mostly serendipity! They’ve never created a factory from scratch; every single one was the purchase of a struggling, poorly-managed little place on the verge of bankruptcy, but with an order book. Each one had its own set of strengths and weaknesses, and they figure out how to use the combined entity to maximize each ones strengths.
And lack of spring and fall seasons. This is one of my favorite Ohio weather charts, temps are basically the same from June to the first week of October and then the bottom falls out.
> My understanding from talking to industrial engineers is that American manufacturing is quite competitive when the product is consistent.
When the product is consistent, you can get competitive pretty much everywhere. That's a luxury you will never have unless you are already a big MNC.
On paper, US manufacturing been cheaper than in China for quite a few years already, but you have to spell that "ON PAPER" with big bold letters.
1. Labour — flyover states had wages comparable to South China for 2-3 years.
2. Education — supposedly best in the world, supposedly, at least beating Chinese public secondary school
3. Supreme "intellectual" property regime — no comparison to China at all, you can sue whomever, whenever, for whatever, and barristers here are even calling you themselves to offer their services to sue your competitors
4. Supply chain — world's biggest companies are there, if they are all here, there must be at least something they all buy.
5. Taxes — US vs. China's tax rate are incomparable: 30% vs 60%-70% something depending on incalculable amount of fees, charges, levies
How things are in reality:
1. People in US you can hire cheaper than highschoolers in China are really not-employable, in other words people with problems.
2. Education is there, but only for people who can already dish out a sum, otherwise even a passable secondary education is not a given.
3. Yes, you can sue everybody, and the same applies in reverse too!
4. Those companies really do buy, and sell a lot of stuff, just not from you, but the same guy you buy your stuff in China
5. US taxes are half that of China, but Chinese accountants know how to run from taxes 10 times better than American accountants.
Supply chain for electronics nothing compares to China and Shenzhen, the people that can make little things at a moments notice, it's not very comparable.
There was a part we looked at, comparable came from the Nintendo Wii.
This part came from this little hackey shop in Shenzhen.
Essentially found out this 'world class product' had some very specialized parts made by tiny shops in China. That kind of adaptability is not quite in the USA.
Tool and Die as well.
But it could be I think if there were more demand for it.
Someone should do something about those IP laws. They are outdated relics of a bygone era. Patent lawyers are like family court lawyers. It brings no benefit to society. Those laws have allowed companies to take liberties.
I'd like to point out John Foley, the founder of Peloton, is an industrial engineer himself. For making a physical product, it's a great background to start with.
Lots of analogs to great programmers in terms of when to optimize what, and how. Manufacturing process selection, optimal batch size, make vs buy, accounting for supply chain uncertainty, profitability analysis, etc.
Huh, I would have thought constant changes would be easier onshore as it is easier to talk to the factory floor in real time to make the adjustments. Once that is all sorted out you then send it offshore as it is easily repeatable.
Labor onshore is expensive. If you only need a few it doesn't matter but once you have offshore labor they are flexible enough to handle changes. Onshore manufacturing implies a large amount of automation, but that automation limits the changes you can make and still fit into the automation. If the change is something that is CNC, then you can make the change easily. However if the change needs a whole new jig, making the jig is more expensive than having a skill machinist make the part by hand with a file - those skilled machinists are cheaper offshore. You pay off the jig over thousands (or millions) of product.
Once you have production offshore it is even harder. They may have made a few jigs (not as many as labor is cheap enough to not need them), but and odds are even in the worst case they can re-use all but one of those jigs. Thus once you are offshore it is better to let offshore do the prototype work.
I think people underestimate how much of offshore manufacturing is done by hand still. The cheapness comes from any factory being able to switch to just about any competitive production quickly. But they are much less likely to invest in equipment and automation.
At scale, there are also complications, like the cost of training, labor laws, or approving role changes with the union.
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.
> “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.”
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 ;)
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.
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.
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.)
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.
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?
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.
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.
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.
I mean, it's still just 1 person every 500 sq ft. That's a pretty sparsely populated factory.
And nowadays automation rarely reduces the number of employees substantially. The days of a worker doing one very simple task day in and day out are long gone. Most automated manufacturing lines are designed with every step having an associated operator who can load material in and out (which is a very difficult task to automate generally), which also keeps a person conveniently located for handling errors, cleaning, light maintenance, handling edge cases, assisting people at neighboring workstations, etc. In fact, automation actually often requires more labor as robots tend to be slower than human workers and prone to various errors which humans would simply deal with. Their advantage though is in automation's consistency, which allows for much more efficient supply chain management. While some automated systems can be made to outperform human operators, this is usually prohibitively expensive.
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.
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.
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.
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).
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.
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.
You're not wrong about the thread, or rather the initial time sequence of the thread—but it's important to understand that that is not representative of the community. It is only the self-selected first-to-comment. Unfortunately the comments with the fastest TTP (time to post) tend to be produced by reflexive reactions, and—also unfortunately—most reflexive reactions are negative ones.
We're lucky in a sense to have a double-contrarian dynamic here.
On Reddit there's only a single-contrarian dynamic, where the contrarian post remains at the top, and is less liable to be questioned than the original article. Sometimes the top-voted, contrarian post has evidently not actually read the article.
Of course in older days of forums there was an infinite-contrarian dynamic, where the arguing back and forth continued forever.
When they left that reply there was a tiny number of `cynical' replies. Replies that most people would just skim right past and look for substance, though there really isn't a lot to discuss about "company announces manufacturing plant" beyond things like tax incentives (which would be a cynical comment). Maybe people could talk about automation if there were details and it was further along, but it isn't. It's just an announcement.
Any assumption that a site frequented by people around the globe should be euphoric about a US manufacturing plant seems flawed.
I don't intend this comment to argue with them or with the assessment, but I've lurked on HN long enough to see the growing tide of early onset pearl clutchers who hit a quiet thread with a trite "Well I've never!" moral righteousness, then enjoying waves and waves of adulation while the target of their disdain are pummeled. What is the dynamic behind that? Shouldn't it have a name, because it is a negative, increasingly common tactic that sidetracks many threads.
The only step I know that seems viable is the long, slow process of community education. Technical solutions don't really seem like they would help. I suppose we could put up a nag screen when there aren't many comments in a thread, asking people to check whether they're posting from the right place...but we've always tried to avoid that kind of thing, and even if each such step made sense individually they would soon compound into something annoying.
Fortunately, not everyone needs to understand these things, just enough to start feeding back into the system and affecting the culture.
I'd need to see such a model doing a good-enough job of identifying snarky / angry comments. The worst case of such a solution is that it's almost good enough but not quite—an uncanny valley type thing—in which case it will just piss people off. And anything less good than that would merely add noise.
Edit: of course, since comments are all public data, anyone who wanted to could work on such a model, and if anyone came up with one that was good enough, that would be significant work and I would very much like to know!
We might be willing to pay. It might also be possible to marshal a community effort, if it were organized in the right way. Hmm - there might be something to this idea. The trick would be to set it up so that even if it failed, it would be an interesting failure.
You can get intriguing descriptive statistics (n-gram frequencies, time distributions) from even a relatively small labeling effort, well before you have much predictive value. So, in that sense you'll have something interesting in failure.
If you'd like a hand, please email me. I figure you have access to my hidden email address.
I don't think this particular issue is related to new younger audiences, because—by inspection at least—the initial wave of objections isn't noticeably coming from newer users. I haven't specifically analyzed that though.
Complaints about "notable" drops in quality go back all the way to the beginning of HN. Of course it's possible that they're all true, but that would be a lot of notable drops. Or maybe some are true and some aren't, in which case we're fluctuating within a range... or maybe they didn't use to be true but now they are true? That's of course what the person perceiving the "notable drop" always feels—but there are also other explanations for this feeling, such as sample bias and nostalgia bias (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...). It's pretty hard to establish anything objective about it. If I randomly look at past frontpages and past comments, they don't seem consistently better or worse (but see the previous sentence).
I always hesitate to praise new plants in the US. They added a Sketchers distribution center in my home town and they just closed the other locations laying off a ton of workers. It was so automated it replaced a couple other plants with less than half the workers that were laid off. With the tax breaks it was given, it was a net negative for the city even accounting for the jobs it "Made".
Unless there were ridiculously excessive tax breaks, I fail to see the issue. Where as they previously had a greater number of workers doing the same thing, they now have fewer workers who are more productive. More productive workers could receive higher wages as their work ultimately generates more value.
I'm confused. If you give tax breaks then you take a loss. That's what tax breaks are. Tax breaks usually exist to buy reputation for the local politician with tax payer money. They never made sense economically because the overall tax burden for non subsidized companies goes up. If your tax rates are not competitive then you just change your tax rate for everyone.
In an ideal situation, that would absolutely be the case. The trouble comes when neighbouring suburban "cities" start competing against each other for the potential for a business like OP referenced.
Oftentimes these are just incorporated industrial areas with minimal housing and little/no incentive to invest in public services. The businesses in this city/township are certainly running the show, and the few people living within those borders have little to no incentive or ability to organize and work for change. Afterall - people with surplus money/time would choose to live elsewhere.
Its a vicious cycle to the bottom, since these types of cities/townships compete against the main city proper (in the case of large urban areas) or other nearby cities and towns that are actually trying to provide for their citizens.
>> How can a tax break be a net negative for the city if it creates new jobs in the city
Any time the costs to the city outweigh the benefit of getting those jobs. Industrial pollution can be a greater detriment than a handful jobs. Or the city can turn over land that would otherwise be put to other uses. Or the jobs might all be people who don't actually live in the city, saddling the city with resulting traffic/pollution issues but with no practical job benefits. I don't know or think that Peloton is going to do such things, but it is very possible for downsides to be greater than the benefit of creating jobs.
A classic example might be a distribution warehouse (not amazon, oldschool warehouse). Maybe there are five or ten people who work at the facility, but the city has to deal with a constant flow of trucks in and out. The downside of those trucks will probably be greater than the handful of jobs a warehouse may generate.
Things like Abattoirs, Textiles, and Paper Making are all considered light industry. If you've ever driven by one of these you may understand industrial pollution.
Assuming they're tax breaks on property taxes (since other than sales taxes, those are the most viable avenues for a city to tax), they would lose tax revenue on whatever property the factory is on (it is not the case that they wouldn't have been able to collect taxes on the business anyway, because the land they use is land they would have taxed had it been owned by someone else). So they may have to tax other businesses more to make up for it, which could drive those businesses away, or make them less competitive. Other businesses in the area can also be hurt by the presence of an employer who can offer higher compensation than they otherwise would be able to. And while hurting existing local businesses to bring in another could be worth it in the short run, in the long run pandering to a single company at the detriment of others could make you entirely dependent on that company and its fortunes.
* It sets a precedent for other companies to leverage the same tax breaks.
* Facilities still use public roads and infrastructure. A road with 50 more trucks per day deteriorates more quickly, but the facility isn't paying for that directly.
Cities typically don't collect income tax, so their ability to derive revenue from 'job creation' is limited. Especially if the people working those jobs are living/shopping in the next town over.
But that would create the moral hazard of paying people not to work and the entire economy would grind to a halt! Just like how restaurant owners have to start paying closer to a living wage now.
Sure. Wages are just one cost component. An example restaurant spends 32% of revenue on staff, 32% on food, 32% on overhead. The owner takes a 4% profit. Industry wages inflate by N%. There's not a one to one relationship between wages for dishwashers and hosts and the menu prices. The owner is free to make their own trade offs between holding the line on wage increases, passing through the cost, automating/reducing labor intensity, taking less profit, trying to negotiate no price increase from their vendors, etc.
The average fella will always want to just drink a beer with friends and badmouth the politicians, their boss, a few celebrities and some rich people. Forums like this one are just the electronic version of it.
It doesn't matter.
That said, look for Peloton having solid business reasons to do this, maybe even tax subsidies and the like. A CEO may have their best intention to help America and create jobs and so on good things. But still ultimately it has to also make business sense, because they answer to a board and the board answers to shareholders.
The lack of manufacturing capability in the US for consumer products shows that either it’s more than a 5% premium and/or “plenty of people” is an insufficient amount for large scale businesses.
It costs too much to manufacture here in part because we don't have a manufacturing infrastructure on par with China, and because it costs money for a business to "move back".
It would be a multi-decade project, but we could (and imo, should) government subsidize our way out of that.
Peloton has a pretty good moat in the form of a huge stable of talented instructors. I personally use a non-Peloton DIY solution, but it is inferior in real ways.
I was not either. I just like to point out that people like to blame executives and shareholders and owners, and yet it is the country as a whole knowingly voting with their dollars for cheaper products made with cheaper labor from overseas that enable those businesses to succeed (and consequently the businesses using domestic labor to fail).
So a CEO answers to a board answers to shareholders answers to the collective population of buyers, which is us.
I was referring to people knowingly choosing to purchase products made with cheaper labor from overseas over more expensive products made with domestic labor/environmental regulations.
I’ll bite: are the majority of jobs going to support middle class lifestyles. I used to live in a town where there was a decent amount of manufacturing and your basic “machine operator” was probably getting paid less than what retail companies are offering right now.
The comments I see are mocking the product as rich-people toys; completely ignoring the software/services side of the equation.
We wouldn't see the same snark if it was a Razer mouse factory, even though that's also rich-people toys, because it's more line with average HN user's interests.
As of this writing, the majority of root-level comments are some mix of extreme cynicism and knee-jerk reactions. But you're right, at least they're downvoted.
I think the reason is that most of HN is not very knowledgeable of manufacturing generally (one commenter was shocked at spending $400m on a factory), combined with hatred for Peloton (for whatever reason) specifically.
I don't agree with the comments in question but downvoting them to oblivion is a bit harsh and uncalled for. It's like that scene from the high school movie trope where a group of kids tells another kid they can't sit at their lunch table.
That would be more like downvoting an account or a person. Downvoting a comment simply signals that there's something wrong with the comment. If the next comment is fine, it's welcome at the lunch table.
>people that are all in Silcon Valley and completely oblivious to the plight of Midwest Americans
I'm not seeing this attitude here. The (heavily downvoted) comments are all criticizing feasibility. A factory quickly shut down helps nobody. Maybe they're wrong, but not everything needs to immediately devolve into binary identity politics, with the clueless elites vs the struggling Americans.
> Peloton makes this announcement and it's nothing but sarcasm and snark.
Because people expect another Juicer here. There is no way in the world for a bicycle factory to cost $400M.
For such money, I can setup you 400 bicycle factories, and somebody who is an industry insider can probably do even more.
I myself been involved with company trying to start a scooter knockdown kit assembly line, with some parts manufacturing 7 years ago in BC, Canada, and Washington state in USA.
It was all around $800k USD, which includes 1 year of operation. It was all a complete disaster though on the manpower, and supplies side, as everybody except for the company owner expected.
The first line worked who did not manage to miswire a colour coded, mechanically keyed harness with just 6 connectors was a MEng graduate who wanted 60 something thousand USD, and was slow as molasses.
And yes, custom fasteners were impossible to procure in North America as such. Fastener companies wouldn't even talk to you if you don't put up n*$100k up front. Same thing in China starts in under $10k.
The 400 $1 million bicycle factories will probably fare just as well as your $800k scooter assembly factory. I think Peloton knows a little bit more about manufacturing their product than you do.
I'm a manufacturing engineer. Anyone telling you to avoid machining like a curse has no idea what they are talking about. For small production runs it is almost always the most economical option, and even mass produced parts typically need secondary machining for any applications that require tight tolerance. And even if the things you're actually producing can be made without machining, any self respecting factory should have a machine shop for tooling and fixtures.
I am also dying to know how you made a scooter without any machined components.
> For small production runs it is almost always the most economical option, and even mass produced parts typically need secondary machining for any applications that require tight tolerance.
I haven't said avoid machined parts. I said avoid machining as part of your own manufacturing process.
It looks very odd to have a lone, expensive n-axis CNC sitting on the shop floor just to do few parts.
> any self respecting factory should have a machine shop for tooling and fixtures.
For most of my career by now, it was always faster, and easier to have tooling made by a contractor, than on-site. I can email a solidworks sketch in the morning, and get a perfect mold/die by the evening.
> I am also dying to know how you made a scooter without any machined components.
As said before without machining, not machined parts.
We were buying Yadea kits. Assembly was very straightforward. Slide two parts of a frame with slide locks, and welds. Affix other parts, and panelling. That was all to it, except for local workforce not being able to handle pretty much everything.
Assembling kits other people manufactured is not manufacturing - that's assembly.
If you don't need it to do a lot of work, a cheap used cnc is incredibly cheap. You can easily get a decent one for under 30k and if you can wait for a deal you can probably snag something for under 10. Lathes are even cheaper. They're easily the most accessible machine tools.
I used to work for a tool and die shop. It took us weeks from when we quoted a job to when it would ship and people came to us because of how fast we were. I don't know where in the world you're getting same day molds and dies, but that's not normal at all.
The manufacturing jobs actually don't matter, it's the investment rate that must go up to match the savings rate.
If you can build factories and nobody has to work in those then you should just keep building factories. It would be even better if those factories produced solar panels or wind turbines.
is manufacturing job middle class? It is a dire job that people should only hold when they have no other choice and should grow into other jobs whenever they can
The inverse is true as well. If there are people who cannot find jobs, then employers wont have an incentive to be productive, they can afford to waste people on bullshit jobs.
No disrespect meant, but this sentiment is common among those without any experience with US manufacturing.
Industrial maintenance mechanics make $25-35 an hour depending on skills. Machinists make $30-50/hr. Skilled machine operators earn $22-30+ hourly depending on the type of machine and skill required. Plants like these hoover up industrial, mechanical, electrical, process, mechatronic engineers all at over $100k.
Perhaps you meant that completely unskilled labor is less in demand at manufacturing facilities. Even that isn't really true: the idea that 100% of these roles are automated is often believed by people without exposure to manufacturing; the reality is that you still need a lot of unskilled people making $15-20/hour for the plant to work, even with plenty of automation.
There are certainly fewer jobs than before, due to greater efficiencies and automation, but they aren't bad paying.
I'd say $20-25 is the cut off for good paying so really only the well paid people are the skilled ones. Those jobs will continue to exist, but will not be as numerous as unskilled jobs that paid well once were.
You may, but might I mention those are different circumstances? In one case, it's a foreign company and a government leaders making grandiose statements with little action.
In this example, it's a publicly traded US company that's making the move to control their own supply chain that was affected by foreign manufacturing. They stated they intend to break ground this summer. Could you wait a few months to see?
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.
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.
>but that just means infrastructure got built in Wisconsin.
Quite a bit of the infrastructure goes nowhere -it only benefits a factory built out at that location. As a Chicago resident who sometimes visits Milwaukee, I will personally note that the interstate construction was horrible and ripped up roads that had been completed just a few years prior.
To say nothing of the people that lost their homes to eminent domain.
Foxconn has a long history of doing exactly what they did in Wisconsin - over and over and over again. That's ignoring the fact their initial claim of investing $10 billion was absurd on its face.
Peloton has a very real financial incentive to do this. Treadmills and bikes are HEAVY, and as they called out in the article the demand has outstripped supply and rush shipping from overseas has been extremely expensive for them.
Foxconn's reasoning was essentially: we don't want to be caught up in Trump's trade war so we'll say we're building this factory and get a bunch of tax breaks.
Part of the cynicism is that we've seen announcements like this before get quietly abandoned once the fanfare fades away. Apple was making Mac Pros in Texas... then they stopped and moved production to China. Microsoft was making the Surface Hub in Oregon for a little while... then they stopped and moved production to China. And don't even get me started on the Wisconsin Foxconn fiasco.
Cynicism is a perfectly justified response to announcements like this.
> Apple was making Mac Pros in Texas... then they stopped and moved production to China.
Quote:
“It was an experiment to prove that the U.S. supply chain could work as good as China’s, and it failed miserably,” a former senior manager is quoted as saying.
No one opens a whole factory just for the PR. They tried, and the experiment didn't work. The US has objective problems in supporting mass manufacturing and assembly. Guilting companies into it won't work.
The problem that the US has supporting mass manufacturing and assembly is that companies like Apple stopped making things there, and once that happened all the expertise and supply chains to support that manufacturing was lost, meaning that now it's not possible to make stuff in the US anymore and those companies are totally dependent on China which didn't make this mistake. Part of the problem Apple had was that they couldn't get items as basic as screws in the quantities needed from US suppliers, and why would they be able to when there's no US manufacturers which need those items in those quantities?
There's a chicken egg problem, but let's not blame Apple for this trend. Apple's original move to China in the 90s was ALSO prompted by the need to scale. This wouldn't make sense if we interpret things the way you do.
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.
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
I don't get what this means? What's an "OEM kit assembly type" car factory?
And what do you mean a body shop? Do you mean like a fabrication facility where they form body panels, and then do paint after assembly?
Body shops are where they do repairs for collision and dents after a car is already completed. A domestic factory might have one to fix flaws in the paint and body incurred during manufacturing... Cars imported from overseas get bodywork done at the port, generally due to shipping damage. (Yes your brand new car may have already been repaired.) It's not really the big part of building a car at all though. I feel like you might be missing something, or misunderstanding something. Or maybe it's just me.
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.
Body parts? That's playing around with press machines. Panels are so basic. Suspensions, coiling steel. Could you call any of the above serious manufacturing?
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.
Creating a factory in the cheapest geographical region ends up costing more in shipping per car plus the duties for importing a car.
400 million in some locations would be bigger than the annual budget for the country. But in some locations you wouldn't even get a call back trying to buy a basketball or baseball team or soccer team.
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.
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."
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.
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.
Which, again, happens with all treadmills, because they are dangerous. Which is why there is a security key and a giant warning to keep small children and pets away from it.
Most treadmills are advertised as gym equipment rather than home equipment.
Most gym areas have restrictions such as not allowing kids under a specific age (I can't remember the exact number, I think it was 14). Even gyms in residential buildings have this restriction.
Now, many treadmills don't have enough space under them to enable the kind of stuff that Peloton treadmills do to pets and kids ("sucking" them under the treadmill and killing them).
It doesn't happen with all treadmills, it happens on treadmills without a guard. You pointing to other flawed designs doesn't make Peloton's design less flawed.
I'd challenge you to find me 10 treadmills that have the guard you speak of. I have personally looked at probably 2 dozen treadmills in my life while shopping. Run on hundreds in gyms across the globe. I can't think of a single treadmill I've ever come across with a plastic guard across the bottom. I have no doubt a few exist but I would be absolutely shocked to find out they exist in a meaningful enough number to be anything but a rounding error.
I'd challenge you to do the opposite, because my experience is apparently the antithesis of yours. I have run on treadmills in gyms all over the world as well and I can't remember using a single one that didn't have better protection from sucking small things into it than the Peloton. Every treadmill I've used (as far as I can recall) either had a much more enclosed back or a (usually metal) bar to prevent exactly the situation that occurred in the video I posted.
I'm not, because I remove the safety key when I'm not using it. It takes literally 1 second, it's a magnetic key. The amount of effort to install and remove it is a fraction of what it takes to tie my shoes before a run.
If someone leaves a loaded gun on the kitchen counter and leaves it for an unsupervised child to play with, do you blame the gun manufacturer, or the parent?
Please make your substantive points without falling into the flamewar style and especially without escalating to personal attack. When someone else is wrong, it suffices to supply correct information.
I knew I'd probably get flagged for this, and I'm sorry for devolving this thread. A close friend's child was severely maimed as a result of this defect, so when someone with nothing at stake shares an opinion that "nothing is wrong", it struck a nerve. Only sending love.
Edit: This is the first time in over a decade on HN that I've posted an apology and been downvoted for it. Is this kind of followup against site guidelines or discouraged? I'm trying to understand what I've done wrong here. This feels incredibly toxic.
I'm sorry to hear about your friend's child. That would be the kind of detail that would make the original comment much more meaningful and relatable, though of course it's also a sensitive thing that one might not want to include.
I wouldn't worry about the occasional errant downvote; if it isn't a noticeable pattern, it's best to remember that misclicks are a thing, and just move on. People will usually give corrective upvotes in such cases (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...). If it does become a noticeable pattern, then it's best to reflect on what in one's comments might be giving rise to it, because the odds in that case are that there's something worth adjusting.
Well, the choice of location may offer some legal preference in case of future faults. I'm aware that Ohio has a safe harbour law to protect companies against data breach if they comply with certain criteria they outline. So may well be other such safe harbour legislation that would be favourable for liability mitigation and with that, insurance liability reduction.
So may well be many nuances at play in this selection, or might even be down to some CEO living nearby and just wants to pop a made local/USA sticker on the product.
Dear people who are downvoting me: I’d appreciate if you shared some thoughts in the comments. Otherwise, you’re just being meaner than I was in my original comment.
I didn’t and don’t appear to be able to downvote, but your comment appears super orthogonal to the title subject, far enough afield to be considered trolling or just trying to drag Pelotons name through the mud in unrelated discussions. That to me would be what I would speculate led to the downvotes.
I’ve responded to a few of these “share if you’re downvoting” comments and usually they’re just a vehicle for an argument.
But whatever, I’ll do it this time too. I downvoted your comment because it bored me with how repetitive the idea it expresses is. I don’t need to go into every Apple thread and be reminded they have a walled garden, every Microsoft thread and reminded of their antitrust stuff, every Peloton thread and reminded of the treadmill. It was mainstream news in the US, dude.
I have only so much time and I don’t want to spend it reading the same thing over and over again.
Never Complain about downvoting - even if you think its unfair, its counter productive. Also, refraining (from complaining) will build the disagreement muscle and will check 'approval seeking' instincts.
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.
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.
If I am on my way to work I am motivated to not be late. I can truly go for it and reliably give myself the least amount of time for the journey because it is a bike and traffic or schedules of trains or buses matter not.
If I am on a glorified hamster wheel I have none of that motivation. I also lack the exhilaration from having survived. It means nothing to me.
Plenty of people live in places where for many months of the year cycling outdoors isn't particularly pleasant and is often impossible. In those places people often have winter cardio options indoors. I'm not pushing peleton because I think its an overpriced product, but I got a rowing machine instead. Before that I had a stationary bike.
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.
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.
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.
Correct me if my understanding of how tax credits work is wrong, but if Pelton said they'll only build the factory with a $47mm tax credit, the two choices of Ohio's government are as follows:
1. Not collect the first $47mm/$??mm of taxable revenue they generate
2. Not collect any taxable revenue since they didn't build there
Not to mention that there are other ancillary benefits to choice 1 since they'll be paying for land, paying wages, paying truckers to shop things ect.
Therefore there are no other programs that $47mm in uncollected taxes could have been spent on, since the money only exists if they even choose to move there.
Are we on the same page about that or is that not how tax breaks work? (assuming the company refuses to operate at any dollar amount fewer of tax break)
> 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.
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.
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.
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]
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.
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.
Just goes to show there's no winning with internet opinion. Building stuff overseas at the lowest possible price is exploitative and sacrifices American jobs, but then when a company wants to build more expensive, higher quality stuff in the US it's a waste of resources.
Well yea, different people have different opinions. I think globalization is a good thing that provides cheap goods and better jobs for the global poor. Others think globalization is a bad thing that offshores American jobs and exploits workers. I don't think either side is wrong.
> Well yea, different people have different opinions.
Yes but the fact that either extreme can bubble up to the top such that if you say anything you immediately get hit with the strongest disagreement, is I think one of the hallmark properties and biggest problems with the internet/social media
The idea that overseas manufacting in poor countries is exploitation is such obvious BS, given that you can observe the hundreds of millions that were lifted from poverty as a direct consequence, and without which would still be in poverty.
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.
I recently watched a preview for an Apple Fitness spin class and I could not believe how cheesy and superficial it appeared. Apple! I never really appreciated how good Peloton is until Apple helped me see how bad it could have been.
People are used to paying $100+/mo for a Gym, if Peloton can convince them to work out at home thats worth the $2500 they charge every 3 years or so. They can make the equipment free or cheap with multi-year subscriptions.
My wife was dumping 50-100 a month into a gym. I said "I will buy you whatever equipment you are using there and if it breaks you can go back". That was 15 years ago and the stuff is still in good shape and used daily.
Renting makes sense if you can not afford it at all or only will use it for a small period of time. If you are going to use something long term you are usually better off buying that thing.
Also try to buy used equip. Many times people realize they did not really want to do it at all but made an excellent coat hanger. Usually it is in very good condition and you can save a decent amount of cash.
I think also there is this idea that it's the machine or the equipment you need, but all you need is the movement and resistance. When the pandemic hit I bought resistance bands instead of expensive free weights. $60 later I'm squatting, deadlifting, overhead pressing, curling, bench pressing, shoulder pressing, calf raising, lat raising, doing everything really with a rubber band instead of a hunk of metal, doing the same movements and getting the same pump for half the price of a monthly gym membership around here.
I agree. For me it was mostly just to stop her renting the machine. I personally just use simple stuff you learn in PE and some isometrics. Using bands would be a nice augment to that.
You do not need a lot of money to exercise. You can get in cheap. Mostly it is about setting up a routine and doing that. Basically 'procrastination is the thief of time' and 'by repetition I get things done'.
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.
It makes sense that Peloton foresees many, many years of sales without needing to update their hardware much.