NEW YORK (CNNMoney) -- It's no secret that manufacturers in the United States have been making a killing by selling industrial goods to customers in China, India and other hot emerging markets.
But guess what? Companies like Caterpillar (CAT, Fortune 500), Eaton (ETN, Fortune 500) and Danaher (DHR, Fortune 500), which all reported solid fourth quarter profits this week, aren't just doing well because of demand from abroad. A turnaround in the U.S. economy is also helping.
Caterpillar reported Thursday that sales of machinery in North America in the fourth quarter were up 49% from a year ago. Total North American sales for Caterpillar rose 30%.
That's great news obviously. It appears to be a sign that many businesses finally realize that they have to ramp up investment on industrial goods to be used in the U.S.
In other words, the recovery, despite still being painfully slow, is for real.
"Our markets in the U.S. have turned around," said Sandy Cutler, CEO of Eaton, a Cleveland-based maker of electrical components and power systems for trucks and automobiles, in an interview with me Thursday.
"People that deferred maintenance eventually have to buy new products. That's what happened at the end of 2010 and should continue in 2011," Cutler added.
Eaton, like Caterpillar, has benefited from this pickup in demand. Sales of electrical components in the U.S. in the fourth quarter rose 22% from the same period last year.
Sure, some may still have their doubts that the economy is really heating up again. After all, the government reported gross domestic product for the fourth quarter Friday that was a little lower than forecasts.
But consumer spending was up a solid 4.4% on an annualized rate as was nonresidential fixed investment. That latter category is a catch-all for corporate investment on stuff like factories and offices.
What's more, orders for most durable goods (i.e. big-ticket items like transportation equipment and heavy machinery) rose at a healthy clip in December despite a somewhat scary headline number.
The Census Bureau said Thursday that total orders fell 2.5% but that was almost entirely due to a huge plunge in aircraft orders. Backing that out, capital goods orders actually rose 1.4%.
"Consumers are spending more again on big-ticket items. There's a lot of pent-up demand for vehicles," said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida in Orlando and a participant in CNNMoney's exclusive economist survey.
"If we have more job growth that will help manufacturers even more," Snaith added.
The comeback in the auto market is particularly notable. Ford (F, Fortune 500) reported strong sales for 2010 Friday morning, though the stock got hit hard on disappointing earnings. GM (GM) is also expected to report a healthy jump in sales as well sometime next month.
Cutler said he's also encouraged by the turnaround in Detroit. He said that Eaton is forecasting growth of 40% from its U.S. trucking business this year compared to 7% outside the U.S. For autos, domestic production is also expected to outpace foreign demand, but not by as much.
Another factor that's helping the manufacturers? Many companies were forced to cut back and are reaping the benefits of restructuring. GM is a prime example of how the most drastic form of reorganization -- bankruptcy -- can work.
"Companies are rehabilitating themselves. Companies that were overleveraged and overburdened have had a chance to retool," said Peter Kaufman, president of the Gordian Group, a boutique investment bank in New York specializing in restructuring. "GM has a new lease on life."
But that may be bad news. Kaufman said he's still skeptical that manufacturers will use their new-found strength to go on major hiring binges here, saying that outsourcing is still a big concern.
Snaith agreed that manufacturers, despite improving fundamentals, may be wary of expanding too rapidly. They may be content to make do with what they have.
"The sector has become very lean and efficient. Productivity is high. That bodes well for their profits for a period of time," he said.
Reader comment of the week. Normally, I scour the Facebook comments (doing my best to delete the "It's a Little off Topic but" spam that keeps popping up like cockroaches) for my comment of the week. But a message from one of my Twitter followers was too good to ignore.
I tweeted Thursday morning about how smartphone maker Nokia (NOK) disappointed investors yet again with a weak forecast, prompting to me ask the rhetorical (or so I thought) question about the Helsinki-based company. "How do you say earnings warning in Finnish?"
Fortunately, Sami Laeno had an answer. "Tulosvaroitus - $NOK should learn to use it," he tweeted back. Ha!
-- The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
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