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Peloton hid rust, corrosion on exercise bikes sold to customers: report

Peloton secretly hatched a plan last year to cover up signs of rust and corrosion on exercise bikes that were later sent to customers in an initiative that was reportedly known internally as “Project Tinman.” Company brass reportedly implemented the plan last September after workers at Peloton warehouses noticed flaking paint jobs on some exercise bikes manufactured overseas. The discovery prompted Peloton executives to issue instructions to warehouse workers on how to treat signs of rust to allow delivery of the bikes, which cost up to $2,495. According to internal documents obtained by the Financial Times, “Project Tinman” included “standard operating procedures” in which affected bikes were treated with a chemical solution called “rust converter” to conceal signs of corrosion. “It is acceptable if you see some rust through the black layer as the severity of this rust is reduced using the rust converter,” an internal document said, according to the outlet. The policy was reportedly met with anger and alarm by Peloton insiders who spoke to the outlet — noting their view that Peloton scrapped its own quality control standards to meet “unrealistic” sales targets. “It was the single driving factor in my beginning stages of hatred for the company that I had spent the previous year and a half falling in love with,” one Peloton insider told the FT. Peloton’s internal guidelines under “Project Tinman” reportedly called for bikes with signs of rust to be withheld from sale to the general public if they fell short of standards. But warehouse workers who handled bikes claim the standard was often ignored and equipment with “severe” rust was still sent out to customers. “Sometimes bikes had stuff on the outside, so we couldn’t deliver them, but . . . [there were] a lot of bikes that were rusted on the inside that they still sold,” one current Peloton employee added. In a lengthy statement to the Post, a Peloton spokesperson said an inspector at a facility in Cologne, Germany, first found signs of “superficial rust” on the inner tubes of some bike components during pre-delivery examinations conducted in September 2021. The company determined that “cosmetic oxidation” had occurred on non-visual components of approximately 6,000 exercise bikes in distribution. “Our internal testing, based on industry standards, confirmed the cosmetic oxidation issue would have no impact on a Bike’s performance, quality, durability, reliability, or the overall Member experience,” the Peloton spokesperson said. “Additionally, for products in inventory, we implemented a standard rework process to address this cosmetic issue in the aforementioned non-visible parts.” The spokesperson added that Peloton has “not found evidence or received Member complaints that this specific issue has presented a problem” and would work to resolve any issues that arise, including potential bike replacements. The damning report on the alleged sale of rusted bikes surfaced during a period of upheaval at Peloton. Demand for Peloton bikes and treadmills has slowed considerably from peak levels in the early days of the COVID-19 pandemic. The slowdown forced Peloton to dial back production of new equipment due to a backlog of inventory. Earlier this month, Peloton co-founder John Foley – whose leadership drew widespread criticism — said he would step down as CEO and transition to a role as executive chairman. At the same time, the company cut about 20% of its corporate workforce, or roughly 2,800 employees, and canceled plans for a $400 million factory in Ohio. Peloton said the changes will eventually result in $800 million in annual savings. In an email to employees, new Peloton CEO Barry McCarthy said the job cuts were unavoidable due to “unsustainable” financial conditions at the company.

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