Guest Opinion: MBL Hike Could Aid 10 Industries
Nearly five years after the housing bubble burst and the financial system collapsed, politicians are still clamoring for new ways to free up capital and spark growth across the country. The most recent effort, put forth by Sen. Mark Udall, proposes to increase the lending limit of credit unions from the current level of 12.25% of assets to 27.5%.
In light of what might become a credit union renaissance, IBISWorld has identified the top 10 industries that would most benefit from increased credit union lending capabilities and categorized these industries using its proprietary risk rating. IBISWorld uses multiple factors, including industry drivers, revenue projections and life cycle stages, to estimate risk, which reflects the level of difficulty a company encounters within its industry.
According to IBISWorld estimates, the satellite television providers, wireless telecommunications carriers and Internet service providers industries present a medium level of risk to credit unions. Although these industries are expected to display healthy growth over the next five years, they will also face more significant impediments to that growth. For example, satellite television providers face substantial internal and external competition because their products can be easily replaced with less expensive or more entertaining substitutes, such as services from Hulu and Netflix. Wireless telecommunications carriers also face significant threats from several substitutes. In the five years, these three industries are each expected to average about 3.9% annual revenue growth.
Industries that IBISWorld has identified as having high risk for credit unions include wind power, wind turbine manufacturing and hybrid and electric vehicle manufacturing. All three industries are currently in the growth phase of their life cycles with respective average annual growth rates of 8.4%, 2.5% and 6.3% forecast for the five years to 2017. Each of these industries is highly susceptible to swift changes in federal funding and regulation. For example, both wind power and hybrid and electric vehicle manufacturing rely heavily on tax credits that make technological development more feasible and distribution more affordable for consumers.