Understanding What Is Sunset & Sunrise Industry?

With the changing dynamics of the economy, some industries bloom while others shatter. Some manage to meet the pace of economic growth, whereas others fall free to the depths of existential crisis.  The analogy of the sun aptly fits here. Like the sun, some industries upsurge to bolster the economic process while some set at dusk, finding its prevalence hard and struggling.

What Is A Sunset Industry?

Sunset Industry is an established industry that is not seeing any further growth and expansion. It is rolling down the slope due to poor market demand, limited or no technological advancement, or customer preferences have changed, among other things.

Such industries are on the brink of collapse, having passed the pinnacle of maturity possible, and are precarious due to squeezing profitability pools or organic growth.

Sunset industries are those sectors that usually see a decline when they cannot compete with new technology or trends and are unadaptable to changing market and consumer requirements.

Reasons for the decline of such industries can be associated with a lack of innovation, muted or no growth at all, and no new ideas for product innovation.

For all such industries, the decline is inevitably due to a lack of innovation, low sectoral growth, lower profitability, or high market vulnerabilities.

Such industries face dire circumstances in the form of tepid technological improvements and redundant machinery and equipment, with no room to change customer preferences and change the market. These industries succumb to the market challenges with no funding in their pockets and high technological innovation costs, and thus barely manage to stay cost-efficient.

Notably, these industries encompass well-established companies with a long presence in the market that control the enormous flows of financial and physical assets. Due to their failure to adjust to the socio-economic changes and losing the interests of investors, these industries fall.

The issue that sunset industries face is plunging demand but high fixed costs. Their primary goal is to reduce capital stock to slash fixed costs of maintaining the fixed assets, trimming labor costs, and remaining profitable.

These entities are combating their decline in various ways and managing their “end game.” The most common risk associated with sunset industries is depletion in technologies, finances, people, and skills, which are responsible for shaking local and national socio-economic stability.

These industries began to get replaced with new industries that are technologically advanced, have the capacity to do innovations, offer new unique propositions to customers, and manage profit booking. Orderly, this industry would set down again after hitting maturity in abeyance of technology innovation, product improvement, and meeting the requirements of a ticking clock.