The Top 10 Most At-Risk Industries in the US
Although an expected uptick in the economy may support some of these industries in the coming year or two, the long-term forecast looks gloomy.
Risk score: 6.33
Given the unprecedented, $13 billion fine with which the Justice Department just slapped JPMorgan Chase (NYSE:JPM) (an amount that equals half of the bank's 2012 profit), it seems reasonable that investment banks and the financial sector would be facing hard times. Instead, commercial banking has been in flux, at least with respect to its growth potential.
But not for much longer.
Increased government oversight, new legislation that limits fees banks can charge customers, higher requirements for capital reserve holdings, and increased competition from nontraditional financiers have all posed threats to the industry’s well-being.
The next five years, however, will prove kinder (an annualized 7.4% to $725 billion kinder) to commercial banking. The Big Four -- Bank of America (NYSE:BAC), Citibank (NYSE:C), Chase, and Wells Fargo (NYSE:WFC) -- among other large banks are expected to leverage their “wider array of service offerings to attract retail depositors.”
Banks are also building more sophisticated mobile platforms, which will cater to a new generation of clients coming of banking age.
Much like their cohorts in the gas and petroleum space over the last five years, fuel dealers have fallen victim to a less than robust market of crude oil and natural gas. At the height of the recession in 2009, prices sank 36.3% and 39.9%, respectively, and industry revenue fell 14.5% for the year.
Many experts and policymakers believe natural gas will power our future. We’ve begun to see heavy investment in infrastructure and, as the pipeline reaches more customers, fuel firms are expected to feel the competition squeeze from natural gas companies. Still, consistently rising fuel prices point to an annualized 2.2% increase of $51.3 billion in fuel operator revenue through 2018.
Leather Tanning and Finishing
Leather goods are another chapter in the manufacturing sob story. Cheaper operating costs and labor overseas have pushed the industry from our shores. Even recently increased demand from car companies and furniture makers can’t keep leather in the black. The industry is anticipated to lose an annualized 1.9% to $1.7 billion in revenue in the five years to 2018.
The phasing out of the independent repairer isn’t just a simple matter of the big-box shops like Home Depot (NYSE:HD) and Best Buy (NYSE:BBY) bundling service warranties into appliance purchases.
Ironically, the appliance manufacturers themselves have just as much to do with the shuttering of the mom-and-pop shop by not only writing those warranties, but making products that don’t break -- or at least not as often. When something does go wrong, built-in diagnostic tools empower owners to make fixes themselves and, as an added bonus, make their cable TV lineup of DIY shows finally relevant.
More zeroes in the (post-recession) bank account is also starting to allow consumers to splurge on shiny new replacements rather than repair old ones.
This all bodes badly for the appliance-repair industry, headed for a fall of an annualized 1.5% to $3.4 billion through 2018.
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