Manufacturing will sing bankruptcy blues in 2002

Consulting firm PricewaterhouseCoopers (PwC) predicts that 200 major public companies will file for bankruptcy in 2002, with 50% of them from the manufacturing sector and 20% from the service sector. According to PricewaterhouseCoopers's "Phoenix Forecast: Industry Bankruptcies and Restructurings in 2002," the majority of public company bankruptcies will be concentrated in the telecommunications,

Consulting firm PricewaterhouseCoopers (PwC) predicts that 200 major public companies will file for bankruptcy in 2002, with 50% of them from the manufacturing sector and 20% from the service sector.

According to PricewaterhouseCoopers's "Phoenix Forecast: Industry Bankruptcies and Restructurings in 2002," the majority of public company bankruptcies will be concentrated in the telecommunications, automotive, computer hardware, steel, chemical and retail industries.

The automotive industry in particular has yet to absorb the negative impact of its zero percent financing strategy, even as Big Three's market share, profit margins and sole-branded dealerships have declined 12% since 1991. Vehicle replacement parts manufacturers will also face substantially weakened profits, PricewaterhouseCoopers said.

"What we're seeing in each of these sectors is the continuing economic fallout that comes after a period of nine or ten years of unbridled growth," said Carter Pate, author of the report and managing partner of PricewaterhouseCoopers's Financial Advisory Services. "We had a sharp and difficult contraction, compounded by the events of September 11, and these have exacerbated conditions for companies already beset by high leverage and other risks."

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