Businesses like MND have both a high level of fixed overheads...

Businesses like MND have both a high level of fixed overheads and staff that need to be utilised (some totally on a single job, some shared across jobs).

There is typically tension between the Account/Sales Manager (who wants to win business) and the Delivery/Bid Manager roles (who wants the business to be profitable). There are many reasons a company might bid for a job that may not be particularly profitable or even at a loss either to keep an important customer happy (keep a competitor out of the account) or to open up a new line of business (create a competitive advantage for future business).

As clients start scaling back, companies like MND are forced to decide which areas are core (and compete hard for whatever work is available in those areas even if profitability is marginal) just to survive and cut those that aren't (which can involve taking redundancy/restructuring charges). Both Sales and Delivery may together decide a job is "must win" just to keep a part of the business going and avoid those restructuring charges.

What changes in a downturn is that the risk equation gets worse and some customers (also under pressure) become so desperate they behave outside established norms. Some may nitpick and delay milestones unfairly just to improve their own cashflow.

In the GFC I had a substantial team with a local multinational and the parent company froze all payments to suppliers. It turned out to be simply a rolling 90-120 day delay but I had no way of knowing that at the time as the multinational was under internal stress and I couldn't get an answer.

I had friends in the multinational and my team were a mix of permanent staff and contractors who I'd known for ages and which I had to fund for months not knowing if we'd ever be paid. All turned out ok in the end but at the time it was not fun, not fun at all.

Bottom line, it's not quite as straightforward as you suggest.