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      >Good-Bye, SIC  -  Hello, NAICS




## **Good-Bye, SIC  -  Hello, NAICS
The North American Industry Classification System (NAICS)
of the United States, Canada, and Mexico**

Featured topics are:  What is
NAICS?  Why replace
the SIC system?  How is NAICS
better than SIC?  How can
data series be adjusted from SIC to NAICS?  How is
NAICS structured?  Is there a
source for more information about NAICS?**What is NAICS?**

A new classification system has arrived for manufacturing establishments, and the
Energy Information Administration (EIA) has incorporated this new system into its 1998
Manufacturing Energy Consumption Survey (MECS), with data tabulation planned by means of
the new codes.

NAICS (pronounced "nakes") is the new North American Industry Classification
System. It replaces the Standard Industrial Classification (SIC) system used to categorize
businesses by type of activity in which they are engaged.

This new structure was developed jointly by the United States, Canada, and Mexico to
provide consistent, comparable information on an industry-by-industry basis for all three
economies. Each country will use the same detailed definitions to collect, summarize, and
publish statistics about its domestic industries.

Classifications will be regularly updated to reflect the economic structure of the
three countries. NAICS will group together activities that use the same processes in the
production of goods or services. For example, publishers of software are included in
Software Publishers (NAICS code 511210), while those establishments that only reproduce
software are included in Software Reproducing (NAICS code 334611) in the manufacturing
sector.

The U.S. manufacturing sector will now be classified by NAICS codes 31-33. The old SIC
codes for manufacturing were 20-39. Industries are now identified by a 6-digit NAICS code,
in contrast to the 4-digit SIC code. The longer code accommodates the larger number of
sectors and allows greater flexibility in designating subsectors.

The correspondence of NAICS codes to SIC codes, and vice versa, may be found under Manufacturing
at:

**Why replace the SIC system?**

The SIC was based on concepts developed when manufacturing, and not services, dominated
the American economy. A number of service activities were not separately identified, which
led to the obsolescence of the SIC system.

Furthermore, the *North American Free Trade Agreement* (NAFTA), effective
January 1, 1994, facilitates the international flow of goods, services, and capital.
Hence, country-to-country comparability of statistical information is most important, but
the SIC system could not accommodate such scrutiny.

**How is NAICS better than SIC?**

- NAICS classifies into the same group those establishments that use similar production
    processes;
- NAICS recognizes new, emerging, and advanced technology industries;
- NAICS acknowledges the information age in which Americans live and work;
- NAICS considers over 150 new service industries;
- NAICS provides for comparability of data with other NAFTA trading partners;
- NAICS is based on a production-oriented conceptual framework;
- Key improvements made by NAICS include:
- Reorganizing "Services" to better reflect today's economy, adding sectors for
      Professional/Scientific/Technical Services and Health Care/Social Assistance;
- Creating an Information sector, including software publishers, telecommunications
      resellers, satellite telecommunications, paging, and cellular telecommunications;
- Establishing a manufacturing subsector for Computer and Electronic Products, including
      manufacturing of printed circuit assembly, software reproducing, and compact disc
      reproducing;
- Combining restaurants and accommodations to form a new sector, including full-service
      and limited-service restaurants, casino hotels, and bed-and-breakfast inns;
- Restructuring the finance, real estate, and rental industries, adding credit card
      issuing, sales financing, general rental centers, and home health equipment rental;
- Redefining wholesale and retail trade.

**How can data series be adjusted from SIC to NAICS?**

Regrettably, the manufacturing sector will lose some of its historical comparability
due to this one-time break in time-series continuity. However, for the 1998 Manufacturing
Energy Consumption Survey (MECS), the Bureau of the Census has collected the information
necessary to classify establishments on both an NAICS and an SIC basis. Thus, the same
1998 data can be shown on both the old and the new basis in bridge tables that allow
comparisons between the two systems. As a result, MECS data will be produced for the last
time on a two-digit SIC basis for 1998 at the national level only.

The following data series will have bridge tables containing 1998 MECS data; that is to
say, EIA plans to produce the following data tables on both an NAICS and an SIC basis:

- First use of energy;
- Energy for nonfuel purposes, also called feedstocks;
- Inputs of energy, also called fuel consumption;
- Offsite-produced energy;
- Byproduct energy.



**How is NAICS structured?**

|NAICS employs a 6-digit numbering system.               | **Example of NAICS hierarchy**
|------------------------------------------------------- | ------------------------------
|The first two digits designate the "sector;"            | 31 - 33:                      
|the third digit designates the "subsector;"             | 331:                          
|the fourth digit denotes the "industry group;"          | 3315:                         
|the fifth digit indicates the "NAICS industry;"         | 33151:                        
|33152:                                                  |                               
|and the sixth digit shows the "U.S. national industry." | 331521:                       
|331522:                                                 |                               
|331524:                                                 |                               

**Is there a source for more information about NAICS?**





URL for this page:  www.eia.gov/emeu/mecs/mecs98/naics/naics8.html

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File Last Modified: 02/10/2000

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