subject: Top 10 Dying Industries [print this page] Top 10 Dying Industries Top 10 Dying Industries
While the US economy is headed further into recovery, not every industry is performing well. Industries go through life cycles, and largely speaking, these are growth, maturity and decline. Even in a recovery, declining industries continue to underperform, and within IBISWorld's database of close to 700 industries, about 200 are in their decline phase. Of these 200, industry research firm IBISWorld has identified 10 that may be on the verge of extinction in the United States.
The 10 dying industries
The 10 chosen industries all needed to be in the decline phase of their life cycle. Furthermore, during the 10 years from 2000 to 2010, the industries needed to experience a sizeable contraction in revenue and establishments. Finally, to be in the list of 10, they needed to forecast further deterioration for revenue growth and establishments over the five years to 2016. From these basic boundaries, 10 industries were standouts: Manufactured Home Dealers; Record Stores; Photofinishing; Wired Telecommunications Carriers; Apparel Manufacturing; Newspaper Publishing; DVD Game and Video Rental; Mills; and Formal Wear and Costume Rental. Apparel Manufacturing includes a combination of three industries, comprising Men's and Boys' Apparel Manufacturing; Women's and Girls' Apparel Manufacturing; and Costume, Uniform, Infant and Other Apparel Manufacturing. Additionally, the Mills sector groups together four industries: Hosiery and Sock Mills; Textile Mills; Apparel Knitting Mills; and Carpet and Rug Mills.
Of these 10 chosen industries, they all generally exhibit one or more of the following detrimental factors. Industries and companies that observe these conditions may be vulnerable to their own demise in the future. These factors include the following:
Damaging external competition
Particularly relevant to the manufacturing sector, major competition for items produced in the United States comes from imported products, especially low-cost items. Since labor costs and regulations are high domestically, many manufacturers send their production to foreign countries. Downward price pressure from domestic wholesalers, retailers and consumers forces US producers to cut costs in order to offer a competitive price. US firms that cannot send their production activities out of the country face strong competition from imports; therefore, these businesses often fail.
Advancements in technology
While technological developments make life easier and more efficient, they often come at the demise of industries that rely on the old ways of life. Technology change occurs rapidly within many industries across the United States; as a result, it has spawned new industries and business opportunities. However, many traditional industries struggle to keep up and ultimately lose out due to this new wave.
Industry stagnation
As competition becomes fiercer, due to the above two factors and many internal and external reasons, businesses often need to cut costs in all production areas to reduce prices and garner sales. However, it comes at the cost of implementing industry and product R&D. As a result, businesses often put off capital and technology investments, making it more difficult to improve production efficiencies, which ultimately costs time and money. As a result of this vicious cycle, many industries end up stagnating and dying a slow death as others catch up, overtake and prosper.
Ranked in order of industry size at the end of 2010, the following table outlines the 10 dying industries. As indicated in this table, over the past decade, each industry has experienced a severe drop in revenue and a significant decline in establishments. Additionally, these industries are also forecast to continue dwindling in size during the foreseeable future. While these industries are all facing negative numbers, it does not necessarily mean that the players that operate within them are also on the brink of death. Firms that protect their strength in certain market segments, focus on niche opportunities and capitalize on the dwindling number of competitors can often reap the greatest rewards as sole operators, obtaining market survival and profitability.
Manufacturing
Within the 10 dying industries, manufacturing is the first sector to be discussed. Here, the Apparel Manufacturing and Mills industries are relevant. As noted above, these sectors include the following industries: Men's and Boys' Apparel Manufacturing; Women's and Girls' Apparel Manufacturing; Costume, Uniform, Infant and Other Apparel Manufacturing; Hosiery and Sock Mills; Textile Mills; Apparel Knitting Mills; and Carpet and Rug Mills.
When ranking the hardest hit industries over the past decade and for the foreseeable future, these seven industries (two sectors) were all scattered among the top 30 industries that were most in decline. Many of these industries were among the top 10. Largely speaking, apparel manufacturing and mills in the United States are affected by the first point made above, which is damaging external competition. Many US manufacturers have moved their production activities overseas, where low wages help keep costs down. IBISWorld expects that the bulk of these transfers have already occurred, so within the next five years, fewer entrants will actually take the leap. Consequently, the projected declines in industry establishments for apparel manufacturing at 11.3% and mills at 12.8% will be due to competitors shutting up shop rather than moves to offshore locations. Generally speaking, new products can be made more cheaply overseas, cutting down the need for US mills and apparel manufacturers.
In this sector, US producers have some competitive strength concerning strong apparel design, brand development and good textile and product quality. US producers have significant technological competence; however, it is limited to a short time span because firms in developing economies will eventually implement similar technologies. Furthermore, US-based operators possess advanced advertising and promotional skills and have access to a large consumer market. Specifically related to the industry of textile mills, the non-woven fabrics segment goes against the grain in terms of decline. Because of the advanced technologies used within the materials themselves, operators cannot move their businesses overseas. Many countries do not have the technology to produce flame-resistant or moisture-absorbing fabrics, which may represent a niche area that is a key to survival and success. Berkshire Hathaway is a key player in all of the Mills industries, while Hanesbrands is a strong player in Mills and Apparel Manufacturing.
Retail
While many people may think that the Book Stores industry would be a given in the dying retail space, the numbers do not point to that direction. However, if you want more information as to why the Book Stores industry is not dead yet, you'll need to read IBISWorld's industry report. Instead, the Record Stores and Manufactured Home Dealers industries are highlighted within IBISWorld's 10 dying industries. Just by looking at the recent and forecast numbers for revenue and establishments, these two industries have endured great pain over the past decade, and this trend will likely continue in the coming years.
In particular, Manufactured Home Dealers stands out from all industries in IBISWorld's database. They have observed some of the steepest declines in revenue and establishments over the past decade and the coming forecast period is demonstrating no signs of anything positive. The industry's demand is dwindling, while sustaining profit is very difficult. This industry exhibits the third point made above, which involves industry stagnation; during the past decade, operators have experience very little product change. Manufacturers have made cosmetics changes to manufactured homes, but they have not...click here to read the FREE full report on dying industries.
