Downturn Industries

The Most Vulnerable Industries in a Downturn

Airlines and transportation- in a slow economy, fewer goods are sold, business activity stalls or declines, and those who operate on the edge of growth and economic activity are exceptionally vulnerable. Most business travel can be postponed or done with increasingly sophisticated technology that makes travel somewhat obsolete. This makes the bread-and-butter of the airlines a very risky bet. The "premium" airlines that rely on juicy business rates are the riskiest- American Airlines, Delta, etc. Smaller economy airlines such as Southwest and Air Tran are better bets.

Manufacturers and marketers of durable goods- a "durable good" is any purchase that can be postponed for a time during a budget crunch. Think about it- if you've just been laid off, buying a car or new refrigerator is not your first priority. Also, as bankruptcies increase, the amount of "good credit" will decline, meaning that large purchases that are often financed will be delayed until the purchaser has enough cash. Be prepared if your job depends on the success of a GM, Ford, Sears, Home Depot, or Pottery Barn. Engineer Jobs

Retailers in general- excluding the deep discount chains like Wal-mart who will be the first to squeeze suppliers and cut costs in a bad economy, most retailers will suffer tremendously. Malls in particular have a glut of capacity, as this premium retail space has expanded at 3 times the rate of population growth for over 10 years straight! This is a warning for those needing Dillard's, Macy's, Restoration Hardware, or any mid-to-high end retailer to stay in business for them to keep their job.

Construction Industry- any company conducting business in, or providing supplies to, the construction industry and or supporting the continued growth of production capacity. If households delay buying a $20,000 car in a recession, what do you think they will do regarding a $300,000 mansion? Even more critically, what about companies considering a multi-million dollar new facility? Construction industries operate on the very margin of increased growth and capacity, and even the mildest recessions can send real estate and building material prices down the gutter. If commodity prices fail to fall as fast as demand for construction (all indications are that commodities will continue to fall, albeit at a slower pace since they have fallen so far already in the 90's), then suppliers of construction materials will be "squeezed" into bankruptcy within months. Beware of dependence on companies like Owens Corning, Lowe's, Centex, lumber companies, Square D, and firms with highly leveraged investments in real estate. Construction Jobs