Turnaround Management poll respondents see trouble for homebuilder, auto industries in 2007

By Caroline Salls

Pittsburgh, Dec. 20 - Turnaround Management Association's annual trend watch poll revealed that the homebuilder and automotive industries are expected to encounter the "greatest financial and/or operational difficulties in 2007," according to a Wednesday news release.

TMA said skittish consumers are a significant factor in the top choices for the most troubled industries in 2007, with the automotive sector the number one most troubled industry with 74% of respondents predicting trouble, followed by homebuilders with 58% of the vote, construction/contractors with 36% of the vote and manufacturing with 26% of the vote.

The release said potential homebuyers and U.S. automobile owners seem to be in a "wait-and-see" mode, adding to the current distress in those industries.

"Three auto manufacturers are beginning to address and, as a result, many of the Tier One and Tier Two suppliers are having to deal with revenue declines," TMA president Colin Cross said in the release.

"Homebuilders are sitting on undeveloped land they once considered assets," TMA international board of directors member Tom Henderson said in the release.

"Now the land's become just another form of liability as sales of new homes in most markets have slowed."

According to the release, manufacturing has been near the top of the list of distressed industries since TMA began the survey in 2002, with members citing general economic conditions, global competition, legacy costs and a high level of debt as major factors in 2007.

On the other hand, poll respondents named airlines as the industry most likely to improve during 2007.

Other industries expected to improve by more than a quarter of the respondents included technology and financial services.

When asked to name the key factors affecting 2007 turnarounds, 48% of respondents said they believe the influence of hedge and private equity funds will continue to increase, while nearly 30% foresee an increase in second-lien and junior tranche lenders participating in corporate renewal, and nearly 40% predicted that traditional financial institutions will tighten credit during 2007.

TMA is a Chicago-based international non-profit association dedicated to corporate renewal and turnaround management.

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