[Federal Register: December 27, 2002 (Volume 67, Number 249)]
[Notices]
[Page 79499-79506]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27de02-199]
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Part IX
Office of Management and Budget
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2002 North American Industry Classification System--Updates for 2007;
Notice
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OFFICE OF MANAGEMENT AND BUDGET
2002 North American Industry Classification System--Updates for
2007
AGENCY: Office of Management and Budget, Executive Office of the
President.
ACTION: Notice of request for comments related to potential revisions
to the North American Industry Classification System (NAICS) for 2007.
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SUMMARY: Under Title 44, U.S.C. 3504(e), the Office of Management and
Budget, through its Economic Classification Policy Committee (ECPC), is
soliciting public comment on several questions related to a potential
revision of the North American Industry Classification System (NAICS)
for 2007. First, the ECPC is requesting feedback on the relative
priority that should be assigned to each of the four underlying
principles of NAICS. Second, the ECPC is seeking public comment on
three potential goals for NAICS: increasing NAICS comparability within
North America; accounting for new and emerging industries; and
assessing the desirability of achieving greater future comparability
with the industry classification systems used in Europe and the United
Nations. The ECPC is soliciting public comment on each of these goals
and how they should be ranked. Background information about NAICS'
underlying principles and potential goals, as well as specific
questions soliciting comments and suggestions, are provided in Parts I
through IV below. Third, the ECPC is seeking proposals for new and
emerging industries for consideration in potential revisions to NAICS
for 2007. Finally in this notice the ECPC is notifying the public about
procedures to announce updates to NAICS 2002 for any identified errors
and omissions.
In Part I, the ECPC is soliciting public comment on the priority or
weight that should be assigned to the four principles of NAICS: apply
the production-oriented conceptual framework; recognize new and
emerging industries; maintain time series continuity to the extent
possible; and strive for international comparability. In Part II, the
ECPC is soliciting public comment on the need to expand North American
comparability during a 2007 revision of NAICS. Part III includes a
solicitation for comment on the need to identify new and emerging
industries. Part IV solicits public comment on the desirability of
increasing international comparability and approaches that could be
used. Part V solicits proposals that identify new and emerging
industries. Part VI presents notification of a method to publicize
corrections for errors and omissions that are identified in NAICS 2002.
In soliciting public comment about revising NAICS, the ECPC does
not intend to open the entire classification for substantial change in
2007. The ECPC will consider public comments and proposals for changes
or modifications that advance the goals of greater comparability within
North America and that identify new and emerging industries. The ECPC
is also seeking comments on the desirability of greater comparability
with the industry classifications used in Europe and the United Nations
as well as the preferred approach for obtaining greater international
comparability. Although changes to NAICS solely for the purpose of
enhancing international comparability are not expected to be a part of
the NAICS 2007 revision, changes that improve NAICS in other ways and
also enhance comparability will be considered. The comments received by
the ECPC regarding the desirability of international comparability will
be used to compile a set of recommendations for change to the
international classification systems.
DATES: To ensure consideration of comments or proposals related to the
potential revision of NAICS for 2007 detailed in this notice, comments
must be submitted in writing. Comments on Parts I through IV should be
submitted as soon as possible but no later than January 27, 2003.
Comments on Part V should be submitted as soon as possible but no later
than March 28, 2003. Please be aware of delays in mail processing at
Federal facilities due to tightened security. Respondents are
encouraged to send both a hard copy and a second copy via fax or e-
mail.
ADDRESSES: Comments and proposals in response to this notice should be
addressed to John Murphy, Chair, Economic Classification Policy
Committee, Bureau of the Census, Room 2641-3, Washington, DC 20233-
6500. It is suggested that written submissions be provided by e-mail to
John.Burns.Murphy@census.gov or by fax at (301) 457-1343. Mr. Murphy
can be reached at (301) 763-5172.
Electronic Availability: This document is available on the Internet
from the Census Bureau Internet site at http://www.census.gov/epcd/naics07/naics07fr.pdf.
The NAICS site contains previous NAICS United States Federal Register
notices, ECPC Issues Papers, ECPC Reports, the current structure of
NAICS United States 2002, and related documents.
Public Review Procedure: All comments and proposals received in
response to this notice will be available for public inspection at the
Bureau of the Census, Suitland, Maryland. Please telephone the Census
Bureau at (301) 763-5172 to make an appointment to enter the Federal
Center. OMB will publish all ECPC recommendations for changes to NAICS
for 2007 resulting from this notice in the Federal Register for review
and comment prior to final action.
FOR FURTHER INFORMATION CONTACT: John Murphy, Chair, Economic
Classification Policy Committee, Bureau of the Census, Room 2641-3,
Washington, DC 20233-6500. Mr. Murphy can be reached at (301) 763-5172,
by fax at (301) 457-1343, or by e-mail at John.Burns.Murphy@census.gov.
SUPPLEMENTARY INFORMATION: The supplementary information section of
this notice is divided into six parts and an appendix. Part I provides
background on NAICS 2002 and solicits comments on the prioritization of
the four principles of NAICS; Part II solicits views regarding the
advisability of increasing North American comparability; Part III
solicits comments on the advisability of revising the classification
for new and emerging industries; Part IV solicits input on the
desirability of increased international comparability of industry
statistics; Part V solicits proposals for new and emerging industries;
and Part VI notifies the public of the location where the correction of
errors or omissions for NAICS 2002 will be publicized.
Part I: Background of NAICS 2002
The North American Industry Classification System (NAICS) is a
system for classifying establishments (individual business locations)
by type of economic activity in Canada, Mexico, and the United States.
Its purposes are: (1) to facilitate the collection, tabulation,
presentation, and analysis of data relating to establishments, and (2)
to promote uniformity and comparability in the presentation and
analysis of statistical data describing the North American economy.
NAICS is used by Federal statistical agencies that collect or publish
data by industry. It is also widely used by State and local agencies,
trade associations, private businesses, and other organizations.
Mexico's Instituto Nacional de Estad[iacute]stica, Geograf[iacute]a
e Inform[iacute]tica (INEGI), Statistics Canada, and the United States
Office of Management and
[[Page 79501]]
Budget (OMB), through its Economic Classification Policy Committee
(ECPC), collaborated on NAICS to make the industry statistics produced
by the three countries comparable. NAICS is the first industry
classification system developed in accordance with a single principle
of aggregation, the principle that producing units that use similar
production processes should be grouped together in the classification.
NAICS also reflects in a much more explicit way the enormous changes in
technology and in the growth and diversification of services that have
marked recent decades. Industry statistics presented using NAICS are
comparable, to a limited extent, with statistics compiled according to
the latest revision of the United Nations' International Standard
Industrial Classification (ISIC, Revision 3) for some sixty high-level
groupings.
For the three countries, NAICS provides a consistent framework for
the collection, tabulation, presentation, and analysis of industry
statistics used by government policy analysts, by academics and
researchers, by the business community, and by the public. However,
because of different national economic and institutional structures as
well as limited resources and time for constructing NAICS, its
structure was not made entirely comparable at the individual industry
level across all three countries. For some sectors and subsectors, the
statistical agencies of the three countries agreed to harmonize NAICS
based on sectoral boundaries rather than on a detailed industry
structure. (The meaning of sectors and subsectors is provided below.)
The portions of NAICS that are not comparable at the detailed industry
level are delineated in Part II, below.
The four principles of NAICS are:
(1) NAICS is erected on a production-oriented conceptual framework.
This means that producing units that use the same or similar production
processes are grouped together in NAICS.
(2) NAICS gives special attention to developing production-oriented
classifications for (a) new and emerging industries, (b) service
industries in general, and (c) industries engaged in the production of
advanced technologies.
(3) Time series continuity is maintained to the extent possible.
(4) The system strives for compatibility with the two-digit level
of the International Standard Industrial Classification of All Economic
Activities (ISIC Rev. 3) of the United Nations.
The ECPC is committed to maintaining the principles of NAICS as it
develops further refinements. The current request for public comment on
questions related to a potential revision of NAICS in 2007 results
directly from the application of the four NAICS principles.
NAICS uses a hierarchical structure to classify establishments from
the broadest level to the most detailed level using the following
format:
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Sector.............................. 2-digit................. Sectors represent the highest level of
aggregation. There are 20 sectors in NAICS
representing broad levels of aggregation.
Subsector........................... 3-digit................. Subsectors represent the next, more detailed
level of aggregation in NAICS. There are 100
subsectors in NAICS.
Industry Group...................... 4-digit................. Industry groups are more detailed than
subsectors. There are 317 Industry groups in
NAICS.
NAICS Industry...................... 5-digit................. NAICS industries are the level that, in most
cases, represents the lowest level of three
country comparability. There are 725 five-digit
industries in NAICS.
National Industry................... 6-digit................. National industries are the most detailed level
of NAICS. These industries represent the
national level detail necessary for economic
statistics in an industry classification. There
are 1179 U.S. industries in NAICS United
States, 2002.
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The implementation of the first vintage of NAICS--NAICS 1997--
affected almost half of the industries that were available for use
under the 1987 Standard Industrial Classification (SIC). The
application of new concepts, new definitions, and the new structure was
very disruptive to all users of the industry classification. By
comparison, the changes for 2002 were limited in number and confined to
three of the twenty NAICS sectors and 10 percent of the NAICS
industries. In 2002, NAICS was revised to improve comparability in the
Construction sector for the three countries and changes were made to
identify Internet service providers (ISPs), web search portals,
Internet auctions, and other activities not adequately addressed in
NAICS 1997. Complete details on the 2002 revisions were published in an
April 20, 2000, Federal Register notice (65 FR 21242-21282). The
industry changes for 2002 did lead to additional disruption in Federal
statistics because of varying implementation schedules for statistical
agencies. Implementation of NAICS has extended from 1997 with complete
implementation of the NAICS 2002 changes anticipated in 2006 or later.
During this time period, various statistics will continue to be
produced using the 1987 SIC, NAICS 1997, or NAICS 2002. The variation
in implementation schedules is unavoidable because of program
requirements but does cause problems for data users when their source
data are based on different classifications or different versions of
the classification. Additional time series disruptions have been
limited because industry changes for 2002 did not significantly cross
sector lines. A current implementation schedule for the agencies
participating in the ECPC is available at: http://www.census.gov/epcd/www/naicsfed.htm
.
NAICS represents a significant improvement over the previous
classification systems used in North America. To ensure the relevance,
accuracy, and timeliness of the classification, NAICS is reviewed every
five years to determine what, if any, changes are required. The ECPC
recognizes the costs involved when implementing industry classification
revisions in statistical programs and the costs for data users when
there are disruptions in the comparability of data. The ECPC also
recognizes the economic, policy, and statistical implications that
arise when the industry classification system does not identify and
account for important economic developments. Balancing the costs of
change against the potential for more relevant and accurate economic
statistics requires significant input from data producers, data
providers, and data users.
As the ECPC considers possible changes for NAICS 2007, it wants to
ensure that changes to the industrial classification match the needs of
data producers and users over time. The ECPC is soliciting comments on
the priority and weight that should be assigned to each of the four
principles of NAICS:
1. Apply the production-oriented conceptual framework;
2. Recognize new and emerging industries;
3. Maintain time series continuity to the extent possible; and
4. Strive for international comparability.
[[Page 79502]]
Part II. Increasing the North American Comparability of NAICS
The following NAICS sectors are currently comparable only at the
sector (two-digit) level: utilities, wholesale trade; retail trade; and
public administration. Other areas where comparability is somewhere
between the sector level and the NAICS industry (five-digit) level are:
finance and insurance; real estate; waste management and remediation
services; as well as other services including personal and laundry
services, and religious, grantmaking, civic, professional and similar
organizations. Separate agreements providing for detailed industry
comparability between Canada and the United States were reached for the
Utilities, Retail Trade, and Finance and Insurance Sectors. To
distinguish the three countries' versions of NAICS, they are called
NAICS Canada, NAICS Mexico (SCIAN Mexico, in Spanish), and NAICS United
States.
The ECPC recognizes the need for increasing the comparability of
the NAICS structures being used in the three countries. The ECPC also
recognizes the time sensitive nature of any revisions for 2007 and the
costs of change. For this reason, the ECPC is soliciting public comment
on the advisability of work to complete those areas of NAICS where
comparability is currently at the two-digit (sector) level only. It
should be noted that although there is only two-digit comparability for
Public Administration, the governmental structures in each of the three
countries are very different, and a need for comparable statistics
within the Public Administration sector at the detailed industry level
in all three countries has not been identified. Furthermore Wholesale
Trade was revised during the NAICS 2002 review and is not a priority
for the ECPC unless change is needed based on proposals for new and
emerging industries. In addition, there is a separate agreement between
Canada and the United States in the Retail Trade sector at the five-
digit level. Although the Utilities sector is of considerable interest
throughout North America, the current NAICS United States structure is
appropriate for the current level of deregulation in the utility
industries, and we have complete agreement with Canada at the five-
digit (NAICS industry) level.
Because of resource constraints, the ECPC does not plan to increase
North American comparability at this time. The ECPC is soliciting
public comment on this position.
Part III. New and Emerging Industries
NAICS was developed to be a dynamic industry classification. Every
five years, the classification is reviewed to determine the need to
identify new and emerging industries. The ECPC has not, to date,
identified specific changes that are needed. The ECPC is soliciting
public comments on the advisability of revising NAICS for new and
emerging industries in 2007 and soliciting proposals for these new
industries.
When developing proposals for new and emerging industries, please
note that there are two separate economic classification initiatives
underway in the United States. NAICS, the industry classification, is
the subject of this notice. The North American Product Classification
System (NAPCS) will complement the NAICS industry system and provide an
alternate way of classifying output. Comments on NAPCS are not being
sought through this notice. NAICS was developed to classify units
according to their production function. NAICS results in industries
that group units undertaking similar activities using similar resources
but does not necessarily group all similar products or outputs. NAPCS
is being developed to classify the productive economic activities of
units through their products or transactions, within a demand-based
conceptual framework. For example, the hypothetical product of a flu
shot can be provided by a doctor's office, a hospital, or a walk-in
clinic. These three units are classified to three different NAICS
industries; if data users want information about all flu shots
provided, they must be able to identify the individual products coming
out of the units. In many cases, the need for specific statistical data
is better addressed with product data crossing industries rather than
with the creation of a new industry. This is particularly true with
NAICS, which groups establishments into industries based on their
production function. Proposals for new industries in NAICS for 2007
will be evaluated within the context of both the industry and product
classification systems to determine the most appropriate resolution.
Certain proposals may be more adequately addressed through the
identification and collection of product data. For a detailed
description of the NAPCS initiative, see the April 16, 1999, Federal
Register notice (64 FR 18984-18989) available at http://www.census.gov/napcs
.
Part IV. Comparability With the Industry Classifications Used in Europe
and the United Nations
As described in Part I of this notice, one of the principles of
NAICS is comparability with the International Standard Industrial
Classification (ISIC) of the United Nations. The Statistical
Classification of Economic Activities in the European Community (NACE)
is derived directly from ISIC. Over the past two years, an
international working group with representatives from Eurostat, INEGI
of Mexico, Statistics Canada, the United Nations, and the United States
has studied ISIC, NACE, and NAICS. This group has identified the
current classification systems' similarities and differences, beginning
with underlying concepts and continuing to the detailed levels. The
study is a multi-year initiative beginning with a detailed review of
the systems and continuing in future years with recommendations for
change to ISIC and potentially changes to NACE and/or NAICS that would
lead to greater comparability of data resulting from the application of
these systems. Each year, a review of the status and recommendations
from this study is conducted with a decision to continue or stop made
by the sponsoring agencies. The current phase of the study calls for
public input on the advisability of modifying industrial
classifications to foster greater international comparability.
Improved international comparability for NAICS can be attained
using several different approaches:
[sbull] Concordance--The simplest approach for improving
comparability is to create a concordance between ISIC and NAICS and a
concordance between NACE and NAICS showing differences and similarities
of the classification systems. While straightforward to construct,
concordances become problematic because industries or combinations of
industries in one classification do not link directly to an industry in
the other classification. Rather it is common for parts of multiple
industries in one system to link to one or more industries in the other
system, making it very difficult to separate the ``parts'' from the
industry total. As one aspect of the comparability study, the working
group is developing these concordances. Upon their completion, the full
concordances between ISIC and NAICS U.S. and NACE and NAICS U.S. will
be available for review at: http://www.census.gov/epcd/naics02/concordances
.
[sbull] Limited Changes in NAICS--A second approach is to aim for
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comparability at sectoral levels such as manufacturing, retail trade,
and services or at some level below the sector level. This approach
will require changes to the underlying classification systems and would
require changes to specific industries, sometimes creating new
industries or moving part of one industry to another industry. The
international working group has developed an illustrative hypothetical
scenario that represents one way that the differences in
classifications could be resolved. The scenario, summarized in Appendix
I of this notice, creates a structure separate from NAICS that could
form the basis for a recommendation for a new structure for ISIC. With
this scenario, comparability could be obtained for 290 detailed
groupings and 94 related aggregations of those detailed groupings by
making adjustments to 45 NAICS U.S. national industries. The scenario
structure would redefine the ISIC industries and bring them into
agreement with the principles and concepts of NAICS. When combined with
the 45 changes to NAICS U.S. summarized in Appendix I, the results
would reduce or eliminate the many-to-many relationships associated
with moving parts of industries. This scenario is presented as an
illustration of how comparability could be improved while minimizing
changes to NAICS. It does not represent the position of the United
States or the statistical agencies represented on the ECPC. The
scenario is exactly that, an illustration developed using the
principles of NAICS as one possible way to resolve the differences
presented in the concordances prepared by the working group if
comparability beyond those concordances is determined to be desirable
based on the comments received in response to this notice.
[sbull] New Common Classification System--Another approach would be
to adopt a single classification system and associated numbering system
that all countries and all statistical agencies would use. This
approach is deemed to be infeasible because of its cost, significant
differences in the underlying conceptual foundations of existing
classification systems, and the time it would take to negotiate and
implement.
The ECPC is soliciting public comment on several issues related to
comparability of international statistical data:
1. The need for greater comparability of international data;
2. The preferred approach for improving comparability--concordance,
limited changes in NAICS, or a new common classification system;
3. The advisability of making changes to NAICS in order to obtain
greater comparability with NACE and ISIC and the relative amount of
change that would be supported in order to align with a new
international standard based on the principles of NAICS; and
4. The usefulness of the scenario discussed in Appendix I.
Responses to this query will be used in formulating future
recommendations for changes to ISIC.
Part V. Proposals To Identify New and Emerging Industries for NAICS
2007
The ECPC is soliciting proposals for changes to NAICS United States
to account for new and emerging industries. Proposals will be
collected, reviewed, and analyzed. As necessary, proposals for change
will be negotiated with our partners in Canada and Mexico. When this
process is complete, OMB will publish a Federal Register notice that
presents the ECPC recommendations for additional public comment prior
to a final determination of changes to NAICS for 2007.
Proposals for new industries will be evaluated using a variety of
criteria. As previously mentioned, all proposals will be evaluated
based on the application of the production function, their impact on
comparability with North America and others, and their effect on time
series. For any proposals that cross three-country levels of agreement,
negotiations with Canada and Mexico, our partners in NAICS, will also
affect the recommendations for those proposals. In addition, other
criteria may influence recommendations for adoption. From a practical
standpoint, industries must be of appropriate size. At the national
level, this is generally not a major concern but there are a variety of
statistical programs that produce industry data at the regional, State,
MSA, or even county or local level. Proposed industries must include a
sufficient number of establishments so that Federal agencies can
publish industry data without disclosing information about the
operations of individual firms. The ability of government agencies to
classify, collect, and publish data on the proposed basis will be taken
into account. Proposed changes must be such that they can be applied by
agencies within their normal processing operations. Any recommendations
for change forwarded by the ECPC for consideration will also take into
account the cost of making the changes. These costs can be considerable
and the availability of funding to make changes is a critical
consideration.
Proposals for new or revised industries should be consistent with
the production-oriented conceptual framework incorporated into the
principles of NAICS. When formulating proposals, please note that an
industry classification system groups the economic activities of
producing units, which means that the activities of similar producing
units cannot be separated in the industry classification system.
Proposals for changes to NAICS industry classifications must be in
writing and include the following information:
(a) Specific detail about the economic activities to be covered by
the proposed industry, especially its production processes, specialized
labor skills, and any unique materials used. This detail should
demonstrate that the proposal groups establishments that have similar
production processes that are unique and clearly separable from the
production processes of other industries.
(b) Specific indication of the relationship of the proposed
industry to existing NAICS United States six-digit industries.
(c) Documentation of the size and importance of the proposed
industry in the United States.
(d) Information about the proposed industry in Canada and Mexico,
if available.
The ECPC is soliciting proposals for specific new and emerging
industries for consideration during a potential revision to NAICS for
2007 that conform to the NAICS principles and provide the supporting
information listed above.
Part VI. Changes To Account for Errors and Omissions in NAICS 2002
No significant errors or omissions have been identified in NAICS
2002. Any errors or omissions that are identified in the future will be
corrected and posted on the official NAICS Web site at http://www.census.gov/naics
.
Appendix I. A Possible Scenario for Greater Comparability of Industrial
Statistics
A working group with representation from Eurostat, INEGI,
Statistics Canada, the United Nations Statistics Division, and the
United States has generated an illustrative scenario of one way to
bridge the differences between NAICS and ISIC, the international
standard of the United Nations. This scenario provides differing levels
of comparability based on the perceived need for comparable data for
analytical purposes. The hypothetical scenario incorporates
approximately 94 aggregate categories and 290 comparable
[[Page 79504]]
groupings at the most detailed level. The structure below is a summary
of the scenario structure compared to NAICS.
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NAICS Scenario
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11 Agriculture, Forestry, Fishing and A. Agriculture, Forestry,
Hunting. Fishing, and Hunting.
21 Mining.............................. B. Mining.
22 Utilities........................... C. Utilities.
23 Construction........................ D. Construction.
31-33 Manufacturing.................... E-F. Manufacturing.
42 Wholesale Trade..................... G. Wholesale and Retail Trade.
44-45 Retail Trade.....................
48-49 Transportation and Warehousing... H. Transportation and Storage.
51 Information......................... I. Information.
52 Finance and Insurance............... K. Finance and Insurance.
53 Real Estate and Rental and Leasing.. L. Real Estate and Rental and
Leasing.
54 Professional, Scientific and M. Professional, Scientific and
Technical Services. Technical Services, (including
management of companies and
enterprises).
55 Management of Companies and
Enterprises.
56 Administrative and Support and Waste N. Administrative and Support
Management and Remediation Services. Services.
R. Sanitation.
61 Educational Services................ O. Education.
62 Health Care and Social Assistance... P. Health and Social Services.
71 Arts, Entertainment, and Recreation. Q. Arts, Entertainment, and
Recreation.
72 Accommodation and Food Services..... J. Hotels and Restaurants.
81 Other Services (except Public S. Repair and Maintenance
Administration). T. Other Services.
92 Public Administration............... U. Public Administration
V. Extra-territorial
Organizations and Bodies
W. Private Households with
Employed Persons.
------------------------------------------------------------------------
The main concepts of NAICS, including the production function
orientation, formed the basis for the hypothetical scenario. A number
of these concepts, as reflected in the scenario, will represent
considerable disruption for ISIC and NACE but do not affect NAICS. For
example, the repair and maintenance of all manufactured goods (except
personal and household goods) is currently included in manufacturing
for ISIC and NACE but is already a separate sector in NAICS. The
scenario includes a separate aggregation for repair and maintenance
facilities that would potentially pull from all manufacturing
industries in NACE and ISIC. In addition, the repair and maintenance of
personal and household goods is currently included in the trade area of
both ISIC and NACE. That would also have to be separately identified or
moved to a new category under the scenario presented above. A similar
situation exists for installation of machinery, generally in
construction in the scenario but in manufacturing for ISIC and NACE.
Under the scenario, ISIC and NACE would adopt the NAICS treatment
of the Information sector. This would cause disruption to their
services and manufacturing sectors (as was the case when NAICS was
implemented in the United States.) Additionally, ISIC and NACE do not
currently distinguish between electrical and electronic goods. One of
the hallmarks of NAICS was an aggregation for ``high tech''
manufacturing which includes computers, electronic components,
technical instrumentation, and similar manufacturing. The scenario
presented by the working group retains this concept.
The scenario also contains groupings for mining support services
and educational support services. These groupings do not currently
exist in ISIC or NACE. ISIC and NACE would also face considerable
disruption in creating a grouping for scenic and sightseeing
transportation that is currently dispersed by mode of transportation.
On the NAICS side, there are a smaller number of concepts that
would have to be modified or adopted. The most significant would be the
creation of a cargo handling grouping that is not dependent on the mode
of transportation. Currently, NAICS separates cargo handling by the
mode of transportation served. This change would acknowledge that large
portions of cargo handling activities are actually multi-modal.
One potential result of this study is the adoption of a new ISIC
structure based on the scenario and the concepts of NAICS. NACE is
derived from ISIC and represents a more detailed breakdown of the ISIC
structure. This summary of the hypothetical scenario and its impacts is
based on the concept of the international standard (ISIC) changing and
the impact on North America and Europe that would be necessary to
provide data comparable to the new structure of ISIC.
Impacts of the Hypothetical Scenario on the Existing Classifications
Used in the United States and Europe
There are 1179 industries in NAICS United States 2002. Of these
detailed industries, the hypothetical scenario would require 45 to
split (4 percent). Each affected NAICS sector is listed followed by the
number of 6-digit industries in that sector. These splits are
distributed as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
Sector 11, Agriculture, 4 (of 64) industry splits.
Forestry, Fishing and
Hunting.
Sector 21, Mining............ 3 (of 29) industry splits.
Sector 22, Utilities......... 1 (of 10) industry split.
Sector 31-33, Manufacturing.. 25 (of 473) industry splits.
Sector 42, Wholesale Trade... 1 (of 71) industry split.
Sector 48-49, Transportation 4 (of 57) industry splits.
and Warehousing.
Sector 54, Professional, 2 (of 47) industry splits.
Scientific, and Technical
Services.
[[Page 79505]]
Sector 56, Administrative and 1 (of 43) industry split.
Support and Waste Management
and Remediation Services.
Sector 81, Other Services 1 (of 49) industry split.
(except Public
Administration).
Sector 92, Public 2 (of 29) industry splits.
Administration.
------------------------------------------
Total U.S. industry 45 (of 1179) industry splits.
splits.
------------------------------------------------------------------------
Resolution of these splits could involve the identification of new
separate industries or moving part of one industry to another industry.
The ECPC prefers the approach of identifying separate industries if at
all possible within the constraints on industry definition that exist
in NAICS. Industry classifications must cover the universe of economic
activities. Splits in the list above may be technical splits that would
have little or no impact on NAICS time series if moved. For example,
the split of an industry for manufacturing electric trackless trolley
buses is not anticipated to affect any NAICS industries because no
evidence has been found that this activity actually takes place in the
United States. Similarly, a split for the production of town gas would
not affect NAICS United States because that activity, while occurring
in other parts of the world, is no longer significant in the US, if it
exists at all. These, as well as more significant splits, are included
in the 45 splits listed above.
It is important to note that major concepts in NAICS and major
accomplishments in the identification of service industries are largely
untouched by this scenario. There are no changes in Sector 51,
Information; there are two splits in Sector 54, Professional,
Scientific, and Technical Services (one marginal, one that could create
two new industries minimizing its impact). Of the 45 industries that
would need to be split under this scenario, over half are ``other'' or
``all other'' industries. There are several cases where the industry
splits are of sufficient size to consider creation of new industries
for the parts rather than combining the parts with existing industries
and disrupting additional industries. In the balance of the cases,
there is either a strong production function justification for the move
or the industry did not conform to the production function criteria
used in NAICS. Changes were considered based on the production function
during the initial development of NAICS but existing industries with no
request for change were not completely recast, particularly in the
manufacturing sector. In summary, the 45 split industry portions
represent various levels of significance. Many of the significant
changes could represent new industries, thereby minimizing
implementation effects; smaller changes would need to be added to
existing industries in NAICS, thereby increasing the number of detailed
industries with content changes and potential time series breaks.
There are a number of sectors in NAICS United States that have no
split industries under the hypothetical scenario. These include Sector
23, Construction; Sector 44-45, Retail Trade; Sector 51, Information;
Sector 52, Finance and Insurance; Sector 53, Real Estate and Rental and
Leasing; Sector 55, Management of Companies and Enterprises; Sector 61,
Education; Sector 62, Health Care and Social Assistance; Sector 71,
Arts, Entertainment, and Recreation; and Sector 72, Accommodation and
Food Services.
If the detailed changes were implemented as described in the
scenario by all parties, each would be able to maintain its own
nomenclature and coding structure but aggregate to a common standard
using predetermined industry relationships. Comparable building blocks
would allow automated regrouping or aggregation of NAICS U.S. data to a
common international standard. The key to this type of conversion is
the comparability of the building blocks. The scenario developed by the
working group is one possible way to align the content of the building
blocks. This scenario represents a minor adjustment to industry details
for NAICS United States.
If there were a desire to make only those changes necessary for
comparability at the aggregated structure level shown in the summary
above, approximately 10 industries would be split across existing NAICS
sectors. These splits may or may not be of appropriate size to create
separate industries. In cases where they are not of sufficient size or
specialization, the split portion would need to move from one sector to
another and be combined with an existing industry in the target sector.
The remaining 35 split industries identified in the scenario would
require resolution within an existing NAICS sector. Examples of cross
sector changes included in the scenario are:
[sbull] Integrated growing of grapes and production of wine would
move from manufacturing to agriculture;
[sbull] Long distance water pipelines with no treatment activity
would move from utilities to transportation;
[sbull] Factory fish processing ships that also fish (rather than
serve as collection points for a fleet of related fishing vessels)
would move from manufacturing to fishing;
[sbull] Ship hold cleaning services would move from transportation
to administrative and support services; and
[sbull] Automobile emission and safety inspection services would
move from repair and maintenance to professional services.
The examples above are not exhaustive, but they are reflective of
the type and significance of changes required under the scenario. A
full list of the 45 industries that would require content splits under
this scenario is available for review at: http://www.census.gov/epcd/naics/internatworkgrp
.
There are 503 industries in NACE Rev 1. Of these detailed
industries, the hypothetical scenario would require 246 to split (49
percent). These splits are distributed as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
Section A, Agriculture, 7 (of 14) industry splits.
hunting and forestry.
Section B, Fishing........... 2 (of 2) industry splits.
Section C, Mining and 14 (of 16) industry splits.
quarrying.
Section D, Manufacturing..... 143 (of 241) industry splits.
Section E, Electricity, gas 1 (of 4) industry split.
and water supply.
Section F, Construction...... 7 (of 17) industry splits.
Section G, Wholesale and 9 (of 77) industry splits.
retail trade; repair of
motor vehicles, motorcycles
and personal and household
goods.
Section H, Hotels and 1 (of 9) industry split.
restaurants.
Section I, Transport, storage 11 (of 21) industry splits.
and communication.
Section J, Financial 8 (of 12) industry splits.
intermediation.
[[Page 79506]]
Section K, Real estate, 16 (0f 37) industry splits.
renting, and business
activities.
Section L, Public 7 (of 10) industry splits.
administration and defense;
compulsory social security.
Section M, Education......... 1 (of 6) industry split.
Section N, Health and social 4 (of 7) industry splits.
work.
Section O, Other community, 15 (of 28) industry splits.
social and personal service
activities.
Total European NACE 246 industry splits.
splits.
------------------------------------------------------------------------
Only 10 of the 20 NAICS sectors include split industries while all
sections of NACE (except private households and extraterritorial
organizations and bodies) contain splits.
A detailed listing of this scenario is available for review at:
http://www.census.gov/epcd/naics/internatworkgrp. It is important to
note that this is one view of how comparability could be increased, but
it does not represent the only option that could be considered during
future revisions of NAICS in the United States. In addition to the
detailed hypothetical scenario, the web page contains the detailed
reports of the working group and other related documentation for
review.
John D. Graham,
Administrator, Office of Information and Regulatory Affairs.
[FR Doc. 02-32663 Filed 12-26-02; 8:45 am]
BILLING CODE 3110-01-P