Peloton’s choice to construct a producing plant close to Toledo raises hopes for comparable investments in Ohio

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CLEVELAND, Ohio – Peloton’s plan to build a $ 400 million manufacturing facility near Toledo could herald more good things for Ohio.

The fashionable fitness company selected the state across from North Carolina and Georgia to manufacture exercise bikes and treadmills. This will make the company less dependent on its Asian activities.

This is further evidence of the trend among companies to manufacture products in the United States and avoid the supply chain risks exacerbated by the coronavirus pandemic.

And it’s a trend that Ohio hopes to benefit even more from.

“The symbolism that Peloton chose Ohio may sound trivial and mundane, but these large consumer-branded organizations get recognized when they choose a place where they are recognized,” said Baiju Shah, president and CEO of Greater Cleveland Partnership, the Chamber of Commerce.

In assessing Ohio’s chances of expanding its manufacturing base, business development officials point out the numerous characteristics of the state, including available land, proximity to much of the state’s population, good railroad connections, and a rich manufacturing heritage that makes the Settlement on site should facilitate supply chains.

One problem that could affect efforts, but is not unique to the state, is the difficulty many manufacturers have in finding skilled workers. However, various efforts are being made to train workers, match them with employers, and promote advanced technologies like 3D printing, which are vital to the success of manufacturing, said Ethan Karp, President and CEO of MAGNET, short for Manufacturing Advocacy and growth network.

At the top of the state leadership is JobsOhio, the quasi public organization for economic development. The current chairman, Bob Smith, a longtime Cleveland citizen, is optimistic about the state’s prospects for attracting more companies like Peloton.

“Next time it happens, it won’t be a coincidence,” said Smith.

Peloton’s decision to set up a facility in Ohio does not come as a surprise to commercial advisor Kim Kirkendall, who has helped many US companies with their operations in China over the years.

A number of companies want to manufacture in the US rather than relying solely on Asia and the growing uncertainties surrounding world trade, which include rising transportation costs and political turmoil, said Kirkendall, president of International Resource Development.

In the past few months, Kirkendall has been working with Atlantic Tool & Die Co., an auto parts supplier, to completely shut down its plant in China and return some of its previous production to Ohio, where the company has plants in Strongsville, Seville and Seville Sharon Center, said Mike Biscardi, global sales director for Atlantic.

The move created around 25 jobs in Ohio, which Honda in Marysville counts as a major customer. Atlantic plans to fill another 45 positions, said Biscardi.

Atlantic, which started manufacturing in China nearly 13 years ago, decided to cease operations there for a variety of reasons, including the introduction of a 25% tariff on goods from China by former President Donald Trump – a measure supported by the company – and delays to bring the product from there to here.

What took five to six weeks to get to Cleveland five or six years ago now takes 15 to 16 weeks, Biscardi said.

While it’s still cheaper to make things in China, said Bill Koehler, CEO of Team NEO, a regional business development arm of JobsOhio, when you factor in the additional cost of shipping the products to the US, it’s not necessarily a saving.

The long lead times mean companies have to combine their cash with excess inventory as customers demand quick service, especially in the age of Amazon, said Sanjay Singh, chairman of Mace Security International, a Cleveland company that makes pepper spray and other personal protection products .

Singh said he is looking into the idea of ​​developing a supply chain within 100 miles of Cleveland that would allow his company to more efficiently meet customer demand.

“We have a punctual delivery requirement from our customers, especially since we were digitized,” he said.

And in the case of Erwin Wang, he has been importing high-temperature insulation materials from China for 20 years. Now he plans to manufacture the products in two plants in East Palestine, Ohio.

He chose the location close to customers, including steel mills and refineries, and while he made his decision to relocate production two years ago, supply chain problems were exacerbated by the pandemic “because we can’t get containers to ship material from China. “

Perrysburg Republican Haraz Ghanbari said he had known for three or four months that Peloton was considering a Wood County location, and he credits the “robust relationships” between elected officials, JobsOhio and local economic development people to bring the deal to fruition .

He also pointed out the logistical advantages of Wood County, which already has a solar panel manufacturing facility, an Amazon fulfillment center, and a Home Depot distribution facility.

“Wood County is at the crossroads of America,” he said, with easy access to the Ohio Turnpike, Interstate 75 and Toledo Airport.

But Wood County’s win is Ohio’s win too, he said, because Peloton’s decision to build a facility in northwest Ohio “sends a message to the rest of the country that Ohio is open for business”.