This paper explores the linkage between sovereign debt crises and manufacturing industry growth using a difference in difference methodology. Industries facing tough import competition perform relatively better after a sovereign default. Export oriented sectors grow more slowly around default times. These two facts are consistent with the theories stressing trade sanctions as the main cost of sovereign defaults. Industries characterized by high physical capital intensity and asset tangibility tend to suffer less from default episodes. All these effects reach their maximum intensity two to four years after the default event.