Manufacturing sectors to avoid

Calabasas, CA—Thinking about starting a new business? Or maybe branching off into a new industry? You’ll want to check this out first.

A new analysis from a consulting firm in the U.S. has identified which manufacturing sectors have the least growth potential in North America over the next five years.

We chatted with Deborah Sweeney, CEO of the California-based MyCorporation to find out more.

1. Beverage manufacturing (wineries, breweries, bottlers, ice makers)

While there are low barriers to entry in the market, that’s not necessarily a good thing.

“This is one of the least profitable sectors because there are so many competitors,” Sweeney says.

“As a small business, it’s difficult to compete on the same scale and there is little or no pricing power with buyers and suppliers.”

2. Baked goods and products

Because the trade doesn’t require highly skilled or trained manpower, almost anyone can get started, but few can rise to the top.

“It’s very difficult to remain in the industry unless you’re doing something phenomenal or have enough of a trademark to set you apart,” she says.

3. Motor vehicle parts manufacturing

“Auto makers are having a difficult time demanding price cuts from suppliers. Eventually you reach a point where you can only get so efficient,” Sweeney says, adding “it’s a challenge to be profitable in the industry even with brand recognition.”

So, where should fledgling companies be looking?

Sweeney says four sectors have the potential to become profitable in the coming years— plastics and rubber products, machinery, and computer and electronics.

“You’re looking at higher barriers to entry, but in many instances, more overseas opportunities” she says.

“There’s also the promise of new technologies, such as incorporating nanotechnology or specialty metals, that can transform traditional industries and identify solutions that have not been thought of before.”