I get how SVN can be used to share and merge files that developers in a team are working on.  But I would like to hear how people manage forced updates to a developer sandbox when some other change has been made to production.

For example, I have my Dev1 sandbox that I am working on, with many changes.

A 3rd party consulting company pushes a bunch of new features to production, some of which may impact my changes.

What do people do in this case?  In Eclipse, I can clearly have two projects, one that is my Dev1 and the other production.  How do they use Eclipse and SVN to manage merging these two code bases?