With the economy refusing to break down, professionals who make a living by fixing troubled companies have been as frustrated as the Maytag repairman.

Now, their patience may be about to be rewarded. The prospect of an interest rate spike, unstable equity markets and soaring prices for commodities such as energy, resins and steel is gladdening the hearts of turnaround professionals and investors everywhere.

These warning bells are also inspiring a quest to identify the industries that will be most vulnerable to an economic downturn when it finally arrives again.

Among the top picks of turnaround professionals is the real estate market - and, in particular, construction companies, building products suppliers, and mortgage underwriting companies. The culprit, higher interest rates, is making it more expensive for consumers to buy homes, and for developers to build office buildings.

Van E. Conway, senior managing director at turnaround consulting firm Conway MacKenzie & Dunleavy, said that in anticipation of a real estate slowdown, his firm may add one or two professionals to the roughly dozen it has who specialize in real estate and construction turnarounds.

Also at high risk in a downturn, Conway said, are midsized manufacturers slow to seek out cheaper sources of labor abroad. They stand to lose market share both to foreign rivals, and to domestic ones quicker to move operations overseas. Conway MacKenzie & Dunleavy opened a six-person office in Shanghai late last year in part to help clients with $100 million to $2 billion in revenue move their operations to China.

"You really have a world of midmarket manufacturers that have not gone over there," Conway said.

Elsewhere, turnaround professionals say, the chemicals and packaging industries teem with companies that face higher raw-material costs but lack the pricing power to pass those costs on to customers. That’s a classic recipe for failure when business dries up, particularly for companies so highly leveraged that they’ve neglected to invest to upgrade plants and equipment, according to H. Sean Mathis, managing director of Miller Mathis & Co. LLC, a boutique investment bank.

Retailers that cater to blue-collar workers are due to hit some rough patches, turnaround professionals also say. Such workers are getting caught in a vice between rising gasoline prices and higher interest rates, which are making it more expensive to fund purchases with credit cards or with home equity.

Newspaper publishers, meantime, still face their share of problems, from rising paper costs to competition from the Internet as a source of news and information.

"A lot of their basic business is going away," said Julia Whitehead, a senior advisor at Miller Mathis.

Meantime, plenty of repair work remains to be done in the automotive supply business, said Michael Selwood, senior managing director in the corporate finance practice at FTI Consulting. Selwood figures we’re only in the second year of what’s probably a four- or five year- long industry restructuring timeline.

Last year, FTI Consulting had its eye on more than a dozen automotive supply companies vulnerable to a variety of factors, including climbing steel costs; some of these companies later became clients. This year, Selwood said, in part because of the increasing cost of resins used to make plastic and aluminum, the firm has added an additional 10 automotive suppliers to its watch list.

Two June reports from Standard & Poor’s offer further glimpses into vulnerable industries. The first analyzes companies around the world at risk for ratings downgrades. The number of such companies hit 665 in mid-June, the highest level since the report was first published 10 months ago. More than half of these companies are classified as having speculative-grade debt, and more than eight in 10 are based in the U.S. or Europe.

Especially well-represented on the list are the industries mentioned earlier that are heavily dependent on discretionary spending by consumers: automotive, media and entertainment, retail, restaurants and consumer products.

"Pressures have been building" in these markets, the report said, "owing to greater consumer indebtedness, growing uncertainty about the housing outlook and high energy prices."

The three industries with the highest ratio of companies at risk of downgrades to total rated companies are automotive (35%+), telecommunications (30%+) and media and entertainment (30%+), according to S&P.

A second S&P report published this month identifies bond market “weak links," companies at high risk of default on their loans. Nineteen companies made the list, accounting for $6.5 billion in rated debt; all but one are based in the U.S. Most qualify for the list because their debt is rated CCC or lower, and carries a negative outlook.

Consumer products, as a category, account for the most weak links on the list, at four. Two consumer products companies joined the list since May: Anvil Holdings Inc. and Avondale Mills Inc., both clothing makers. Together their affected debt totals $331 million.

The second biggest category, media and entertainment, accounts for three weak links, including one added since May - ICON Health & Fitness Inc, a maker of home fitness equipment. The company has $155 million in affected debt. Categories accounting for two weak links each are retail/restaurants, forest products and chemicals.

Peter J. Solomon Co., a New York-based mergers and acquisitions and restructuring advisory firm, compiles its own watch list every two weeks, and companies exposed to the real estate market have made frequent appearances.

Compiled largely based on stock price moves, the list is divided into decliners and gainers. In an analysis of the 235 companies on the June 15 decliners list, 50 are directly involved in the real estate market. They include 15 real estate management and development companies, 10 thrifts and mortgage finance companies and nine REITS. Other industries with several constituents on the June 15 list include regional banks (17), broadcasting and cable TV (13) and paper packaging and products (10).

To prepare the list, Anders Maxwell, managing director at Peter J. Solomon, starts with the universe of publicly traded equities in the United States, Canada and Western Europe. He then screens companies by a variety of financial metrics; for example, listees must have a total enterprise value greater than $100 million, and a ratio of total funded debt to Ebitda of greater than five (or negative Ebitda over the last 12 months).

So what will it take to send companies on watch lists like these into the repair shops of turnaround professionals? One thing’s for sure: It will take more than an economic downturn. Also needed is a vast evaporation of liquidity from the capital markets.

As long as vulnerable companies can still borrow money, they will be able to delay tackling problems, operational or otherwise. Before the next wave of restructuring hits, banks, finance companies and hedge funds will have to turn their backs on these troubled companies, ignoring their offers to pay premium interest rates for that one last chance.

Turnaround consultant Conway explained, "When there’s an excess amount of money available, you basically delay the inevitable."

"But then," Conway added, "the inevitable’s worse."

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