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Manufacturing Surges on the Rebirth of U.S. Auto

U.S. government statistics unveiled Wednesday showed manufacturing built off of December's impressive gains with another uptick. And much of the credit goes to the automotive industry, which looks healthier than it has in years heading into the core of 2012.

Though overall industrial production was unchanged in January, manufacturing itself performed well yet again. A big part of that stems from the 6.8% gain posted by the index specifically tracking motor vehicles and parts manufacturing. That after the December result was upwardly revised to +3.8%. As loud as any time since the U.S. government bailed out two of the "Big Three" domestic automakers, the industry and those who rely on it have declared as robustly as ever in the newest statistics that the auto rebound is on.

Jim Gillette, an auto industry analyst with IHS automotive, noted his company's research projects domestic auto manufacturing numbers to hit 15.6 million by 2014, a conservative estimate and a world away from the near 10 million in production during the downturn in 2009. Part of that can be traced to the doubling of U.S. auto exports, up to about 1.4 million at last check, in less than a decade. As such, "suppliers are making money now," said Gillette.

"When Toyota and Honda both fell down a bit [safety problems, Japan-related supply-line disruptions], it really opened the doors for other automakers here," Gillette told NACM. "To a large extent, the domestics are doing well because their product is so much better than it was previously. Ford just started launching so much new, stunning product. GM, too, has some great new product out there. Even Chrysler is a nice surprise as, before the Great Recession, some of us thought they were going to go away. They have come back with a vengeance."

Additionally, Gillette believes parts suppliers and automakers are well positioned moving forward, not just because of streamlining business models during the recession, but because people who have put off car purchases can only continue that frugality for so long.

"Cars and trucks on the road are as old as they've ever been," he said. "A lot of people out there have 10-year-old vehicles. The average is almost 11 years. We're seeing a lot of people are getting out there to the lots right now."

Brian Shappell, NACM staff writer