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Sonoco Products is being boxed in by pension costs. The packaging company disappointed investors who thought it would offer positive news in a scheduled presentation, but instead it reduced its outlook, saying its underfunded retirement plan will weigh on 2009 results.

The packaging company's units that serve industrial markets are seeing a much larger than expected decline in volume and profitability as a result of the significantly slowing global economy, according to Charles Hupfer, the Sonoco chief financial officer.

Before the announcement, analysts had been bullish KeyBanc Capital Markets thought the meeting would go so well that it raised its fourth-quarter earnings outlook to 63 cents from 59 cents per share. Citigroup's analyst called the stock one of the most compelling in his coverage universe.

Investors sent shares packing, trading Sonoco Products (nyse: SON - news - people ) down 6.2%, or $1.53, to $22.97.

On average analysts thought Sonoco would pull in 60 cents per share in the fourth quarter, and the company previously expected between 60 and 64 cents. But now the firm expects profit of only 48 cents to 52 cents a share.

The coming year doesn't look much better. Sonoco expects earnings for 2009 to range between $1.95 to $2.05 per share, while Wall Street had hoped for $2.43.

Mid-November asset values and interest rates indicate Sonoco's U.S. pension plan was under-funded by about $138.0 million, the company said. Sonoco estimated a year-over-year increase in 2009 pension expense of about $48.0 million, or 30 cents per share after taxes. Falling stock prices were one likely culprit, and weak interest rates, while in the short run supportive of bond investments, make it hard for pension plans to finance future liabilities in the fixed-income market.

Independent retailers are cutting prices and adding personal touches in order to stay afloat.

When Icelandic designer Steinunn Sigurd opened her flagship boutique in Reykjavik, Iceland, back in 2002, she didn't anticipate the financial avalanche that would come down on her country in September 2008.

However, Sigurd, whose namesake collection offers sexy, offbeat dresses, has chosen to press on despite the downturn. This holiday season, instead of holding one massive sale at the end of the year, she's promoting weekly sales--up to 70% off different products--in order to rid herself of as much inventory as possible.

Hers is one of many independent, high-end boutiques that are finding ways to cut prices or offer personal touches to make sure they see another holiday season--preferably one in which it doesn't take so much convincing to get consumers to spend.

"The world's financial situation is slowing down all future plans," says Sigurd, who hopes someday to expand to New York City. "My main goal is to stay with it. When things get better, so will I."

Widespread Pain
Sigurd's struggles, sadly, are not unique. The U.S. economy shrank by .5% in the third quarter of 2008, according to the Commerce Department, which is bound to affect up-and-coming businesses. And according to the European Union, the Eurozone--comprised of the E.U. countries that use the euro as currency--the economy shrank .2% during that same time period.

Howard Davidowitz, chairman of New York-headquartered Davidowitz & Associates, a national retail consultant and investment banking firm, says that smaller retailers truly suffer in times like these. Linda Dresner, the famed Park Avenue ladies boutique, is one of the downturn's first casualties--it will close after December. Shops like Dresner have it tougher in a downturn since they don't have mass distribution or access to public capital. Plus, their credit is reduced--or cut off altogether--much earlier.

"They have less leverage with lending institutions and creditors of all types," says Davidowitz. "They're the first ones to go, so to speak, because they can't compete with the big guys."

DETROIT -- First it was the outsourcing of components, and then vehicle assembly. Then gasoline prices shot up, slashing demand for trucks and sport-utility vehicles. Now, just when things seemed as if they could not get any worse here, the credit crunch and the subsequent stock market meltdown have dealt powerful new blows to the nation's already reeling car industry

Concern that tightening credit and an overall economic downturn will lead fewer people to buy new cars sent General Motors' stock price plunging 31 percent Thursday to close at $4.76, the lowest since 1950. Ford Motor fell 21 percent, closing at $2.08.

Thursday's automobile stock sell-offs sparked new concern among economists and investors that the U.S. manufacturing sector, which had been slowly constricting, may be squeezed to an unimagined degree by the turmoil on Wall Street, posing a serious new economic threat at a time when the nation is already struggling with a financial sector collapse.

Nowhere is the pain more evident than in Michigan. Falling sales of vehicles and heavy equipment have sent ripples through the manufacturing food chain. The state's unemployment rate is now 9 percent, the highest in the nation. One in 16 home mortgages is "seriously delinquent," trailing only Florida and Nevada.

"It's devastating," said Gov. Jennifer Granholm (D), who added that Michigan has lost nearly 400,000 manufacturing jobs since 2000. "Companies . . . that are already slammed by globalization are being slammed by the credit crunch."

GM's market capitalization now stands at $2.69 billion. The day after the 1929 stock market crash, the company was worth seven times as much in inflation-adjusted dollars, according to market historian Bryan Taylor of Global Financial Data.

The current crisis is worsening a long-term trend for the U.S. auto industry. Over the past eight years, Michigan has lost 47 percent of its vehicle manufacturing jobs and 27 percent of other manufacturing jobs, according to a government analysis. Nationally, the losses have been about 21 percent in each category.

In an economic downturn, automobile companies are often the first to feel the pinch as consumers postpone expensive purchases. Industry sales dropped last month to levels not seen in almost 20 years. Ford fell 34.5 percent compared with the previous September; Chrysler, 32.8 percent; and General Motors, 15.6 percent. Even Toyota, known for fuel efficiency, saw sales drop by 32.3 percent.

Not since 1993 had automakers sold fewer than 1 million cars in a single month. Yet with fear ruling the marketplace and banks reluctant to lend money even to borrowers with strong credit, analysts believe next year's numbers are likely to be as bad.

That means lower revenue for automakers and less money to spend on needed innovation. It means fewer jobs beyond the factory gate. According to David E. Cole, a researcher in Ann Arbor, Mich., every auto plant job generates nine jobs among suppliers and the surrounding community -- four times the multiplier of a typical Wall Street slot.

Ford senior economist Emily Kolinski Morris, who likened an economy without credit to an engine without oil, said: "The dire warnings are not terribly overstated."

Inside a former Cadillac factory in Detroit, Frank Venegas runs Ideal Group, an array of businesses, some closely connected to the auto industry. He is accustomed to doing $100 million worth of annual construction work for GM, but he expects to see fewer construction cranes and is already shipping fewer steel beams for private homes.