Clouds Darken Over the Smokestack Sector

The first wave of the recession has been evident for some time as lenders, home builders, retailers and automakers pulled back the curtains on their crumbling businesses.

But now the second wave of the downturn has begun to take shape, as industrial companies cut production, lay off workers, warn about waning profits or seek bankruptcy protection.

The U.S. industrial benchmark, General Electric (GE Quote), was among the first to show signs of stress as its financing operations struggled in the troubled credit markets, with consumers beginning to default on loans. Since December, industrial firms that ran the gamut from chemical companies like DuPont (DD Quote) to equipment-makers like Caterpillar (CAT Quote) to metal-producers like Alcoa (AA Quote) have begun to slash jobs, cut executive compensation, curtail production and warn of impending losses. ...