51240 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices 

OFFICE OF MANAGEMENT AND 

BUDGET 

North American Industry Classification 

System; Revision for 2012 

AGENCY: Executive Office of the 

President, Office of Management and 

Budget. 

ACTION: Notice of NAICS 2012 Final 

decisions. 

SUMMARY: The North American Industry 

Classification System (NAICS) is a 

system for classifying establishments 

(individual business locations) by type 

of economic activity. Mexico’s Instituto 

Nacional de Estadı ́stica y Geografı ́a 

(INEGI), Statistics Canada, and the 

United States Office of Management and 

Budget (OMB), through its Economic 

Classification Policy Committee (ECPC), 

collaborate on NAICS to make the 

industry statistics produced by the three 

countries comparable. Under 31 U.S.C. 

1104(d) and 44 U.S.C. 3504(e), the 

Office of Management and Budget is 

announcing its final decisions for 

adoption of NAICS revisions for 2012 as 

recommended by the Economic 

Classification Policy Committee in 

OMB’s notice for solicitation of 

comments published in Part IV of the 

May 12, 2010, Federal Register (75 FR 

26856–26869). In the May 12, 2010, 

notice, OMB’s ECPC recommended 

classification guidance for distribution 

centers, logistics service providers, sales 

offices of publishers, and units that 

outsource physical transformation 

activities. The ECPC also provided a list 

of recommended changes to the utilities, 

construction, manufacturing, wholesale 

trade, retail trade, and food services and 

accommodations sectors of NAICS 

United States for 2012. In response to 

public comments received on the 

recommendations, the ECPC withdrew 

the proposal to split the semiconductor 

industry into two new industries and 

OMB is modifying two additional ECPC 

recommendations to better align with 

the public comments. More details on 

these decisions are presented in the 

SUPPLEMENTARY INFORMATION section 

below. 

DATES: Effective Date: Federal statistical 

establishment data published for 

reference years beginning on or after 

January 1, 2012, should be published 

using the 2012 NAICS United States 

codes. Publication of a 2012 NAICS 

United States Manual or supplement is 

planned for January 2012. 

ADDRESSES: You should send 

correspondence about the adoption and 

implementation of the 2012 NAICS as 

shown in the May 12, 2010, Federal 

Register notice, and modified by 

Attachments 1 and 2 of this notice, to: 

Katherine K. Wallman, Chief 

Statistician, Office of Management and 

Budget, 10201 New Executive Office 

Building, Washington, DC 20503, 

telephone number: (202) 395–3093, FAX 

number: (202) 395–7245. Comments 

submitted in response to this notice may 

be made available to the public through 

relevant Web sites. For this reason, 

please do not include in your comments 

information of a confidential nature, 

such as sensitive personal information 

or proprietary information. If you send 

an e-mail comment, your e-mail address 

will be automatically captured and 

included as part of the comment that is 

placed in the public docket. Please note 

that responses to this public comment 

request containing any routine notice 

about the confidentiality of the 

communication will be treated as public 

comments that may be made available to 

the public notwithstanding the 

inclusion of the routine notice. You may 

send comments via e-mail to 

naics@omb.eop.gov with subject 

NAICS12. Because of delays in the 

receipt of regular mail related to 

security screening, respondents are 

encouraged to use electronic 

communications. 

You should address inquiries about 

the content of industries or requests for 

electronic copies of the 2012 NAICS 

tables to: John B. Murphy, Assistant 

Division Chief for Classification 

Activities, Service Sector Statistics 

Division, Bureau of the Census, Room 

8K157, Washington, DC 20233, 

telephone number: (301) 763–5172, FAX 

number: (301) 763–8636, or by e-mail: 

John.Burns.Murphy@census.gov. 

Electronic Availability and Comments: 

This document and the May 12, 2010, 

Federal Register notice are available on 

the Census Bureau’s Web site at http:// 

www.census.gov/naics. The revision for 

2012 will result in a number of code and 

title changes for NAICS. For that reason, 

a full list of NAICS 2012 industry codes 

and titles will be posted on the web site 

prior to publication of the NAICS 

United States, 2012 Manual for 

reference and implementation planning. 

This WWW page also links to previous 

NAICS Federal Register notices and 

related documents. 

FOR FURTHER INFORMATION CONTACT: Paul 

Bugg, 10201 New Executive Office 

Building, Washington, DC 20503, e-mail 

address: pbugg@omb.eop.gov with 

subject NAICS12, telephone number: 

(202) 395–3095, FAX number: (202) 

395–7245. Because of delays in the 

receipt of regular mail related to 

security screening, respondents are 

encouraged to use electronic 

communications. 

SUPPLEMENTARY INFORMATION: NAICS 

was jointly developed by Canada, 

Mexico, and the United States for the 

1997 NAICS. For the 2012 revision, the 

three countries focused on refining the 

structure of the manufacturing sector 

and providing additional classification 

guidance in response to observed 

changes in the economies of each 

country. 

The May 12, 2010, Federal Register 

notice: (1) Summarized the background 

for the proposed revisions to NAICS 

2012 in Part I; (2) contained a summary 

of public comments to the first Federal 

Register notice (74 FR 764–768, January 

7, 2009) for the 2012 NAICS revision 

process in Part II; (3) detailed the 

structure changes recommended by the 

ECPC in Part III; and (4) provided a 

comprehensive listing of changes for 

national industries and their links to 

NAICS 2007 industries in Part IV. 

In response to the ECPC 

recommendations in the May 12, 2010, 

Federal Register, the Semiconductor 

Industry Association (SIA) expressed 

opposition to the recommended split of 

NAICS 334413, Semiconductor and 

Related Device Manufacturing. The 

ECPC withdrew the recommended split 

based on those comments. The 

Semiconductor and Related Device 

Manufacturing industry will remain 

unchanged for NAICS 2012. 

OMB will modify two additional 

ECPC recommendations as published in 

the May 12, 2010, Federal Register 

based on comments from the public. 

The first modification is for the 

structure but not the content of the 

ECPC recommendation for the printing 

industries. The following industries for 

printing will be used in NAICS United 

States, 2012: 323111, Commercial 

Printing (except Screen and Book); 

323113, Screen Printing; and 323117, 

Book Printing. The second modification 

is to the structure and content of the 

industries for nonferrous foundries. 

OMB will retain NAICS 331524, 

Aluminum Foundries (except DieCasting) and will create a residual 

industry, 331529 for Other Nonferrous 

Metal Foundries (except Die-Casting). 

Two final changes are the correction 

of typographical errors in Tables 1 and 

2 of the May 12, 2010, Federal Register 

notice. In Table 1, NAICS 2007 industry 

443111, Household Appliance Stores is 

being recoded to NAICS 2012 443141, 

Household Appliance Stores with no 

change in content. The May 12, 2010, 

Federal Register incorrectly included a 

‘‘pt.’’ indicator on that recoded industry. 

In Table 2, the titles for the 4-digit and 


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Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices 51241 

5-digit Restaurants and Other Eating 

Places were incorrectly listed as 7225 

Restaurants and 72251 Restaurants. In 

fact, the titles should be 7225 

Restaurants and Other Eating Places, 

and 72251 Restaurants and Other Eating 

Places. Each of these changes from the 

May 12, 2010, Federal Register is 

shown in the corresponding Table 1 or 

2 at the end of this notice. 

Factoryless Goods Producers 

Recent years have witnessed the rapid 

and widespread incorporation of 

specialization into goods manufacturing 

as global competition has motivated 

producers to seek more efficient 

production methods. This has resulted 

in outsourcing manufacturing 

transformation activities (i.e., the actual 

physical, chemical or mechanical 

transformation of inputs into new 

outputs) to specialized establishments, 

both foreign and domestic. Such 

outsourcing can lead to inconsistent 

classification of business establishments 

in official statistics when the standard 

classification systems used by those 

programs do not provide sufficient 

guidance. 

NAICS 2007 does not provide clear 

guidance on classification of units that 

control the entire process but 

subcontract out all manufacturing 

transformation activities. To address 

this shortcoming, the ECPC chartered a 

subcommittee to study the issue and 

provide classification guidance that will 

result in consistent classification of 

outsourcing establishments and 

comparable data for these outsourcing 

establishments across various statistical 

programs. The work involved defining 

the types of outsourcing units that exist 

and that require classification guidance, 

examining alternative classification 

schemes, and identifying their effects on 

existing economic statistics. As a result 

of this research, the ECPC decided to 

recommend classification of 

establishments that bear the overall 

responsibility and risk for bringing 

together all processes necessary for the 

production of a good in the 

manufacturing sector, even if the actual 

transformation is 100 percent 

outsourced. 

OMB recognizes that, from a 

conceptual standpoint, at the most 

aggregate level, goods producers arrange 

for and bring together all of the factors 

of production necessary to produce a 

good. Goods producers accept the 

entrepreneurial risk of producing and 

bringing goods to market. When 

individual steps in the complete process 

are outsourced, an establishment should 

remain classified in the manufacturing 

sector. Accordingly, OMB has accepted 

the ECPC recommendation that 

factoryless goods producers (FGPs) be 

classified in manufacturing. 

Data users should note that the 

classification of establishments that 

outsource manufacturing transformation 

in the Manufacturing Sector of NAICS 

2012 affects multiple agencies and 

programs within those agencies. OMB 

recognizes that, as with any new 

concept, there will likely be some 

differences in interpretation across 

agencies during the implementation 

process, and that differences in 

interpretation may lead to data 

inconsistencies. To address this 

challenge, OMB fostered the formation 

of a multi-agency subgroup of the ECPC 

to ensure consistent implementation of 

this clarification to the manufacturing 

sector of NAICS 2012. The 

implementation group includes 

members from various program offices 

in the Bureau of Economic Analysis, the 

Bureau of Labor Statistics, and the 

Census Bureau. 

It is important to both statistical 

agencies and other data users to be able 

to distinguish between definitional and 

economic changes so that they can 

create continuous time series and 

accurately analyze data changes over 

time. The inclusion of revenues from 

FGP activities in manufacturing will 

effectively change the traditional 

definition of manufacturing, and is 

expected to affect statistical estimates at 

the national, State and regional levels. 

This includes statistical outputs such as 

the value of shipments for 

manufacturing industries, value of sales 

for wholesale trade industries, product 

data, material costs and other expenses, 

price indexes, labor and multifactor 

productivity series, and the national 

accounts. The definitional clarification 

will be particularly important for 

industries that are characterized by 

significant amounts of manufacturing 

transformation outsourcing as indicated 

in the examples below. 

The following paragraphs present a 

partial list of the statistics that will be 

affected by the classification guidance 

for establishments that outsource 

transformation activities. 

Bureau of Labor Statistics Producer 

Price Index Program (PPI) 

For lower level price indexes where 

the PPI does not currently price 

products that are produced using 

foreign contractors, products will be 

moved from wholesale trade with 

margin prices to manufacturing with 

product prices. For these products, the 

PPI will be able to reflect price changes 

when an establishment begins to 

outsource some of its production. 

The PPI uses Economic Census data to 

calculate weights for its aggregation 

structures. As a result, the price 

movements for products and industries 

with significant FGP activity will 

increase in relative importance and 

represent a greater share of aggregate 

price index movement. 

Bureau of Labor Statistics Major Sector 

Productivity and Industry Productivity 

Manufacturing and wholesale trade 

industry outputs and inputs (quantity, 

cost) will be affected by the shift of 

establishments identified as FGPs from 

wholesale trade to manufacturing. This 

will affect both labor productivity and 

multifactor productivity measures. 

These changes will require a transitional 

adjustment (bridge) to exclude 

production that occurs in a foreign 

country for historical consistency in 

time series. 

Bureau of Labor Statistics Quarterly 

Census of Employment and Wages 

The classification of FGP 

establishments in manufacturing will 

potentially shift monthly employment, 

total quarterly wages, and the number of 

establishments from other NAICS 

sectors into the manufacturing sector. 

Bureau of Economic Analysis Industry 

Accounts 

In the Bureau of Economic Analysis 

(BEA) industry accounts, gross output 

for the manufacturing sector will be 

higher because FGP output will move 

from the wholesale trade sector to the 

manufacturing sector. Theoretically, the 

combined manufacturing and wholesale 

trade value added would remain 

unchanged. However, because 

shipments of FGPs that own their 

material inputs are currently not 

included in the Census manufacturing 

data and are instead classified to the 

wholesale trade industry, BEA is most 

likely not capturing all output or value 

added for these specific establishments. 

The classification of FGPs in 

manufacturing will capture these 

‘‘missed’’ shipments and value added 

will be affected accordingly. 

Bureau of Economic Analysis 

International Area 

BEA’s international area uses NAICSbased classifications to publish 

enterprise statistics for multi-national 

companies (MNCs) by industry. NAICS 

is used to publish statistics on MNC 

research and development and on 

foreign-owned U.S. establishments from 

links of BEA and Census Bureau data. 

The international guidelines 

recommend ownership of the material 

inputs at the time of processing as the 


Emcdonald on DSK2BSOYB1PROD with NOTICES2
51242 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices 

key to determining whether cross-border 

manufacturing services occur. It is 

important to exclude any foreign 

production from GDP. 

Bureau of Economic Analysis National 

Income and Product Accounts (NIPA) 

BEA’s NIPA accounts benchmark 

their data to the Input-Output table 

every five years (I–O based on Economic 

Census data). A commodity-flow 

method is used in deriving many NIPA 

categories, such as investment in 

equipment. Classifying FGPs in 

manufacturing has the potential to 

significantly affect these estimates, 

especially if the trade flows are not 

appropriately accounted for. A fully 

consistent and integrated set of national 

and international accounts is important 

to avoid measurement inconsistencies. 

Bureau of Economic Analysis Regional 

Accounts 

It is important that the output of FGPs 

and manufacturing service providers 

(MSPs) be recorded in the State (or 

Metropolitan Area) where the 

transformational activity takes place. An 

implementation that assigns this output 

to a headquarters location 

geographically separate from the 

location of activity will not be ideal. 

Census Bureau Economic Programs 

The classification of FGPs to 

manufacturing will affect a wide range 

of statistical outputs from the Census 

Bureau including industry statistics 

from the Economic Census; Annual and 

Monthly Wholesale Trade Surveys; the 

Annual Survey of Manufacturers; 

Monthly Manufacturers’ Inventories, 

Shipments, and Orders (M3); 

Manufacturing and Energy 

Consumption Survey (MECS); County 

Business Patterns (CBP); Quarterly 

Survey of Plant Capacity Utilization 

(QPC); Annual Capital Expenditures 

Survey (ACES); Business R&D and 

Innovation Survey (BRDIS); Business 

Expense Survey (BES); Quarterly 

Financial Report (QFR); and other series 

that are published using NAICS. The 

level of impact will vary based on the 

intensity of outsourcing. 

OMB understands the considerable 

cost and lead time required to 

implement this decision. The ECPC will 

continue the multi-agency subgroup and 

re-charter the subgroup to plan and 

oversee the implementation of this 

decision in a coordinated fashion that 

will keep definitions comparable across 

programs to the extent possible. OMB 

also acknowledges that this conceptual 

clarification will take time to implement 

consistently using statistically sound 

methods. The decision to classify 

factoryless goods producers in 

manufacturing will be mentioned in the 

NAICS United States 2012 Manual. 

Statistical programs are expected to 

begin the work of implementing this 

change as soon as possible, and to the 

extent possible apply the 

implementation to data releases as data 

collection and processing system 

changes allow, but beginning no later 

than 2017. In the interim, statistical 

agencies should undertake outreach 

prior to implementation, and include a 

clear statement for data users when the 

change is implemented. Users will find 

information about the plans and 

progress on implementation at http://

www.census.gov/naics. 

Final Decisions 

After taking into consideration other 

comments submitted in direct response 

to the May 12, 2010, Federal Register 

notice, as well as benefits and costs, and 

after consultation with the Economic 

Classification Policy Committee, 

Mexico’s Instituto Nacional de 

Estadı ́stica y Geografı ́a (INEGI) and 

Statistics Canada, OMB made no other 

changes to the scope and substance of 

the ECPC’s recommendations outlined 

in the May 12, 2010, Federal Register 

notice. The other comments that were 

received supported proposed changes, 

suggested changes that would be 

incompatible with the production-based 

foundation of NAICS such as proposals 

for modeling and simulation industries, 

or suggested changes that would be 

incompatible with proposals that were 

accepted. 

OMB’s final decisions regarding 

revision of NAICS for 2012 are to adopt 

the proposals contained in the May 12, 

2010, Federal Register, with the 

changes detailed in the preceding 

paragraphs. Attachments 1 and 2 below 

show the corrections for Tables 1 and 2 

in the May 12, 2010, Federal Register 

notice based on these changes. 

Cass R. Sunstein, 

Administrator, Office of Information and 

Regulatory Affairs. 

Attachment 1 

TABLE 1—2007 NAICS UNITED STATES MATCHED TO 2012 NAICS UNITED STATES

2007 NAICS 

code 2007 NAICS description Status code 

2012 

NAICS 

code 

2012 NAICS description 

323110 ......... Commercial Lithographic Printing ........................... pt ............ 323111 Commercial Printing (except Screen and Books). 

323111 ......... Commercial Gravure Printing .................................. pt ............ 323111 Commercial Printing (except Screen and Books). 

323112 ......... Commercial Flexographic Printing .......................... pt ............ 323111 Commercial Printing (except Screen and Books). 

323114 ......... Quick Printing .......................................................... pt ............ 323111 Commercial Printing (except Screen and Books). 

323115 ......... Digital Printing ......................................................... pt ............ 323111 Commercial Printing (except Screen and Books). 

323116 ......... Manifold Business Forms Printing .......................... pt ............ 323111 Commercial Printing (except Screen and Books). 

323118 ......... Blankbook, Looseleaf Binders, and Devices Manufacturing.pt ............ 323111 Commercial Printing (except Screen and Books). 

323119 ......... Other Commercial Printing ...................................... pt ............ 323111 Commercial Printing (except Screen and Books). 

331524 ......... Aluminum Foundries (except Die-Casting) ............. ................ 331524 Aluminum Foundries (except Die-Casting). 

331525 ......... Copper Foundries (except Die-Casting) ................. pt ............ 331529 Other Nonferrous Metal Foundries (except DieCasting). 

331528 ......... Other Nonferrous Foundries (except Die-Casting) pt ............ 331529 Other Nonferrous Metal Foundries (except DieCasting). 

334413 ......... Semiconductor and Related Device Manufacturing ................ 334413 Semiconductor and Related Device Manufacturing. 

443111 ......... Household Appliance Stores ................................... ................ 443141 Household Appliance Stores. 

pt.—Part of 2012 NAICS United States industry. 


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Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices 51243 

Attachment 2 

TABLE 2—2012 NAICS UNITED STATES MATCHED TO 2007 NAICS UNITED STATES

2012 NAICS 

code 2012 NAICS description Status code 

2007 

NAICS 

code 

2007 NAICS description 

323111 ......... Commercial Printing (except Screen and Books) ... R ............ 323110 Commercial Lithographic Printing 

323111 Commercial Gravure Printing. 

323112 Commercial Flexographic Printing. 

323114 Quick Printing. 

323115 Digital Printing. 

323116 Manifold Business Forms Printing. 

323118 Blankbook, Looseleaf Binders, and Devices Manufacturing. 

323119 Other Commercial Printing. 

331524 ......... Aluminum Foundries (except Die-Casting) ............. ................ 331524 Aluminum Foundries (except Die-Casting). 

331529 ......... Other Nonferrous Metal Foundries (except DieCasting).N ............ 331525 

331528 

Copper Foundries (except Die-Casting) 

Other Nonferrous Foundries (except Die-Casting). 

334413 ......... Semiconductor and Related Device Manufacturing ................ 334413 Semiconductor and Related Device Manufacturing. 

7225 ............. Restaurants and Other Eating Places 

72251 ........... Restaurants and Other Eating Places 

R—2007 NAICS industry code reused with different content; N—new NAICS industry for 2012. 

[FR Doc. 2011–20997 Filed 8–16–11; 8:45 am] 

BILLING CODE P 


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