What is downshifting?

Downshifting is literally placing a vehicle's transmission in a lower gear, i.e. one with a greater number of revolutions of the driveshaft compared to the revolutions of the drive wheels. This is normally used to brake a vehicle using engine torque, to improve torque on steep grades, or to facilitate acceleration.

Metaphorically, it is used to indicate a reduction in an economic activity, such as manufacturing output, by a single company or an entire industry.