U.S. auto industry seen as most distressed in 2009

By Chelsea Emery

NEW YORK (Reuters) - The auto sector is expected to be the most financially troubled industry in the United States next year, taking the top spot from the homebuilding group, according to a survey of restructuring and bankruptcy professionals released on Monday.

As the nation has slid into recession, auto and auto parts makers have been slammed by dropping sales, pushing industry stalwarts such as General Motors and their suppliers to the brink of bankruptcy.

Homebuilding was named the most troubled industry for 2008 but fell to third for the coming year, according to the survey by Turnaround Management Association, taken during the first two weeks of December.

"The Detroit Big 3 (automakers) have been losing volumes for some period of time, but the volume reductions are now across the board," Charles Moore, senior managing director with turnaround firm Conway MacKenzie & Dunleavy, said in an interview.

"Suppliers, being as capital intensive as they are, are finding it very hard to cut their cost structure," he said.

In addition, consumers are finding it difficult to get the credit to buy new cars, said Moore, who is also president of the Detroit chapter of Turnaround Management Association.

Retail, hurt by sliding consumer spending and a drastic cut in credit availability, is seen as the second-most distressed industry for the coming year, according to the survey, up from 6th place last year.

The poll surveyed representatives from 213 companies with TMA membership.