Saving sick companies

“How to find a job.” That’s the cover story in the new Fortune, out this week.

Here’s one place to find a job: Workout firms that help companies in trouble. Fred Crawford, the CEO of AlixPartners, came by Fortune’s offices late last week and talked about his buoyant business. “We have 850 people, and we’ve been growing 20% to 30% a year for the past decade. We think that’s sustainable.”

The elite in this down and dirty business of corporate restructuring include AlixPartners and Alvarez & Marsal, the outfit that’s now in charge at bankrupt Lehman Brothers (honcho Bryan Marsal replaced Dick Fuld as Lehman’s CEO in January). At AlixPartners, Crawford is a hybrid of sorts: He earned his chops at other consulting firms helping relatively healthy companies like Procter & Gamble (PG), Fedex (FDX), Coca-Cola (KO) and Disney (DIS) build their top lines.

Now, at AlixPartners, he’s selling two main types of services: turnaround/restructuring (where past clients  include DeLorean in 1984, Detroit in 1994, and later Enron, Refco, WorldCom and Kmart) and “business performance improvement.” The latter service is for companies that want to stay out of the former category. Among the companies on that roster today: Borders and Saks. Beleaguered Borders’ (BGP) stock has fallen from $25 in 2007 to under $1. Meanwhile, Saks’ (SKS) stock decline has been almost as steep, to $1.88.

Working with–and making money from–a wide range of companies, struggling and really sick, gives Crawford a good view on the economy. So what’s his outlook for recovery? Not good.

Crawford mainly follows three indicators: unemployment, housing values and consumer spending and saving. The latter is most critical, he says–and he’s worried based on the findings in an AlixPartners survey of 5,000 U.S. households, completed in March. Americans say that even after the recession ends, their spending will return to just 86% of pre-recession levels. “That would take a trillion dollars out of the U.S. economy annually,” says Crawford, admitting that he finds that big of a spending dip hard to imagine.

Even so, he says, people who predict a recovery this year “are just dead wrong.” He adds: “I think this will be a severe recession with a long tail on it.” And where will crisis strike next? Regional banks, Crawford predicts. Gloom, he says, is “the new normal.”