China

Source: Cummins Analyst Day presentation, November 2015. 

This chart, taken from Cummins' (NYSE: CMI) recent analyst day presentation, perfectly sums up why China is such a huge concern for companies in the industrial sector today. Key industries in China are clearly in a down cycle, be it mining, construction, or trucking.

Manufacturing activity in China hit three-year lows last month, with the purchasing managers' index for November confirming a contraction. Meanwhile, China continues to dump huge amounts of steel, aluminum, and oil products into other global markets even as it battles a supply glut, sending commodities prices crashing.

Needless to say, every industrials company that bet on the booming Chinese economy is struggling today, sending their shares crashing. 

CMI Chart

CMI data by YCharts.

The mining malaise has hit Caterpillar (NYSE: CAT) and Joy Global (NYSE: JOY), Manitowoc (NYSE: MTW) hard, with each feeling the pinch of a slowdown in China's construction markets. Meanwhile, engine makers Cummins and Westport Innovations (NASDAQ: WPRT) face a huge threat as the Chinese trucking market cools off as well.

To understand the gravity of the situation, you need to know how much stake these companies have in China, what hurdles they face going forward, and why these stocks could drop further. The slideshow below gives has all the details:

Neha Chamaria has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Cummins. The Motley Fool recommends Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.