The Financial Times reports that Peloton covered up rust last fall on new bikes in an attempt to avoid a recall. The full article can be accessed here but it is behind a paywall.
According to The Financial Times, the project was internally referred to as “Project Tinman”. Peloton warehouse workers noticed that some Bikes shipped from Taiwan had chipped paint in September 2021, just months after the Tread+ recall.
Instead, of returning bikes to their manufacturer, executives hated the plan, known internally as “Project Tinman”, which concealed the corrosion and sent machines to customers who paid between $1,495-$2,495 for them to be repaired.
FT Magazinefirst reported Project Tinman last Wednesday when Barry McCarthy was interviewed. However, eight former and current employees have been contacted to get more information about the project.
Peloton informed The Financial Times that the cause of chipped paint was “a buildup of rust on non-visible parts of the bike – inner frame of seat and handlebars – and did not affect product integrity.” 120 employees had also performed “rigorous tests” to ensure that the rust didn’t impact product performance.
The Financial Times’sources add an extra layer to this story.
The FT found that Tinman’s standard operating procedures for dealing with corrosion were to use a chemical solution known as “rust converter”. This chemical solution conceals corrosion by reacting with rust to create a black layer. The scheme was named Tinman by employees to avoid using terms like “rust” or other terms that were not compatible with Peloton’s quality brand.
Peloton insiders were angered that the plan was being implemented. They argued that it cut across Peloton’s focus on its users. These members are called “members” in order to create a feeling that buyers are more than just customers. Tinman also highlighted the company’s quality control processes and its failure to meet aggressive sales targets as part of the search for growth.
Two warehouse workers told that both the older Bikes and the more recent Bike+ were delivered to customers with “severe rust”. Peloton said that this was a cosmetic problem that they solved by sending the bikes to “rework”, before they were sent to the final mile warehouse from where they would be shipped to customers.
According to internal documents, if the product didn’t meet cosmetic standards, it was either thrown out or given as a “refurb”, a discount bike that is only available to employees and their family. Peloton employees claimed that quality control was not always adhered to due to pressure to sell.
Important to remember that the warranty does not cover rust. The Financial Times was told by a former employee of Peloton that Peloton would not assist customers with rusty bikes. Peloton stated that if we discover that this particular issue has caused any problems for any member, then we will replace the bike.