[Federal Register Volume 61, Number 215 (Tuesday, November 5, 1996)]
[Notices]
[Pages 57006-57183]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28087]


      

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Part II





Office of Management and Budget





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Economic Classification Policy Committee: Standard Industrial 
Classification Replacement--The North American Industry Classification 
System Proposed Industry Classification Structure; Solicitation of 
Comments; Notice

  Federal Register / Vol. 61, No. 215 / Tuesday, November 5, 1996 / 
Notices  

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OFFICE OF MANAGEMENT AND BUDGET


Economic Classification Policy Committee: Standard Industrial 
Classification Replacement--The North American Industry Classification 
System Proposed Industry Classification Structure

AGENCY: Office of Management and Budget, Executive Office of the 
President.

ACTION: Notice of solicitation of comments on final recommendations for 
the North American Industry Classification System.

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SUMMARY: Under Title 44 U.S.C. 3504, the Office of Management and 
Budget (OMB) is seeking public comment on the advisability of adopting 
the proposed North American Industry Classification System (NAICS), the 
industry classification system developed by OMB's Economic 
Classification Policy Committee to replace the current Standard 
Industrial Classification (SIC) system.
    OMB has previously published six Federal Register notices seeking 
comment on the development of NAICS and its content. The March 31, 
1993, Federal Register notice, pp. 16990-17004, announced the 
establishment of the Economic Classification Policy Committee (ECPC) to 
produce a new industrial classification system for 1997. OMB charged 
the ECPC with a ``fresh slate'' examination of economic classifications 
for statistical purposes, including industrial classifications, product 
classifications, and product code groupings. The July 26, 1994, Federal 
Register notice, pp. 38092-38096, solicited comments on the concepts 
for the new system and the decision to develop NAICS in cooperation 
with Statistics Canada and Mexico's Instituto Nacional de Estadistica, 
Geografia e Informatica (INEGI). That notice also included a request 
for the public to submit recommendations for industries to be included 
in the new system. The deadline for submitting proposals for new or 
revised industries was November 7, 1994.
    After considering all proposals from the public, consulting with a 
large number of U.S. data users and industry groups, and undertaking 
extensive discussions with Statistics Canada and INEGI, a new 
industrial structure for NAICS was developed that would apply to all 
three North American countries. Four Federal Register notices 
subsequently were published seeking comment on various parts of the 
structure and industries of the NAICS system. The first of these four 
notices was published in the Federal Register, July 26, 1995, pp. 
38436-38452, requesting comment on proposed industry structures for 
petroleum and coal product manufacturing, chemical manufacturing, and 
rubber and plastics manufacturing; for broadcasting and 
telecommunications; and for food services and drinking places and 
accommodations. The second Federal Register notice was published on 
February 6, 1996, pp. 4524-4578, requesting comment on proposed 
industry structures for crop production, animal production, forestry 
and logging; textile mills, textile product mills, apparel 
manufacturing, and leather and allied product manufacturing; food 
manufacturing and beverage and tobacco product manufacturing; 
fabricated metal product manufacturing; machinery manufacturing; 
electrical equipment, appliance and component manufacturing; and 
transportation equipment manufacturing. The third Federal Register 
notice was published on May 28, 1996, pp. 26558-26668, requesting 
comment on proposed industry structures for health and social 
assistance; educational services; computers and electronics product 
manufacturing; furniture manufacturing; printing and related support 
activities; professional, technical and scientific services; performing 
arts, spectator sports and related industries; museums, historical 
sites and similar institutions; recreation, amusement and gambling; 
information; wood product manufacturing, except furniture; rental and 
leasing; repair and maintenance; management and support; 
transportation; mining; paper manufacturing; nonmetallic minerals 
manufacturing; primary metal manufacturing; miscellaneous 
manufacturing; and postal service and couriers.
    Finally, the fourth of the industry-specific Federal Register 
notices (constituting the sixth notice concerning the NAICS overall 
development) was published on July 5, 1996, pp. 35384-35515, requesting 
comment on proposed industry structures for finance and insurance; 
wholesale trade; retail trade; construction; utilities; waste 
management and remediation services; real estate; lessors of other non-
financial assets; personal and laundry services; and religious, grant 
making, civic, and other membership organizations. That notice also 
presented the entire classification system and requested comments on 
the proposed hierarchy and coding system of NAICS.
    The final deadline for receipt of public comments on the structure 
and the industries include in NAICS was September 3, 1996. Statistics 
Canada and INEGI also sought comments on the proposed structures. 
Further discussions were held among the three countries to consider 
public comments received from all three countries. Changes incorporated 
into the new system based on these comments are shown and explained in 
the SUPPLEMENTARY INFORMATION section of this notice.
    After this extensive process of development and discussions by the 
ECPC, with maximum possible input as called for by its mandate, OMB is 
seeking comment on the advisability of accepting NAICS, with the 
changes published in this notice, as the industry classification system 
to be employed in relevant statistical collections by all U.S. 
statistical agencies. Statistics Canada and INEGI have accepted the new 
NAICS system, which will be used for industrial classification in the 
statistical programs of Canada and Mexico.

DATES: To ensure consideration of comments on the adoption and 
implementation of NAICS, comments must be in writing and should be 
submitted as soon as possible, but no later than December 20, 1996. 
This proposed industry system would become effective in the U.S. on 
January 1, 1997.

ADDRESSES: Correspondence about the adoption and implementation of 
NAICS as shown in this Federal Register notice should be sent to: 
Katherine K. Wallman, Chief Statistician, Office of Management and 
Budget, 10201 New Executive Office Building, Washington, D.C. 20503, 
telephone number: (202) 395-3093, FAX number: (202) 395-7245.
    Inquiries about the content of industries or requests for 
electronic copies of the tables should be made to Carole Ambler, 
Coordinator, Economic Classification Policy Committee, Bureau of the 
Census, Room 2633-3, Washington, DC 20233, telephone number: (301) 457-
2668, FAX number: (301) 457-1343.

ELECTRONIC AVAILABILITY AND COMMENTS: This document is available on the 
Internet from the Census Bureau via WWW browser, ftp, and E-mail.
    To obtain this document via WWW browser, connect to ``http://
www.census.gov'' then select ``Subjects A to Z'', then select ``N'', 
then select ``NAICS (North American Industry Classification System).'' 
This WWW page contains previous NAICS Federal

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Register notices and related documents as well.
    To obtain this document via ftp, login to ftp.census.gov as 
anonymous, and retrieve the files ``naicsfr7.pdf,'' ``naicsfr7 
TBL1.pdf,'' and ``naicsfr7 TBL2.pdf'' from the ``/pub/epcd/naics'' 
directory. (That directory also contains previous NAICS Federal 
Register notices and related documents.)
    To obtain this document via Internet E-mail, send a message to 
[email protected] with the body text as follows: ``get gatekeeper 
naics.txt''. Instructions for obtaining this and other NAICS documents 
will be delivered as a message attachment.
    Comments may be sent via Internet E-mail to OMB at [email protected] 
(do not include any capital letters in the address). Comments received 
at this address by the date specified above will be included as part of 
the official record.

FOR FURTHER INFORMATION CONTACT: Paul Bugg, 10201 New Executive Office 
Bldg., Washington, DC 20503, E-mail address: [email protected], 
telephone number: (202) 395-3093, FAX number: (202) 395-7245. Inquiries 
about the content of industries or requests for electronic copies of 
the tables should be made to Carole Ambler, Coordinator, Economic 
Classification Policy Committee, Bureau of the Census, Room 2633-3, 
Washington, DC 20233, telephone number: (301) 457-2668, FAX number: 
(301) 457-1343.

SUPPLEMENTARY INFORMATION:

    The development of NAICS began in 1992 with the establishment of 
the Economic Classification Policy Committee by OMB to study the 
desirability of developing a new industry classification system for the 
United States based on a single economic concept. A March 31, 1993, 
Federal Register notice, pp. 16990-17004, announced the establishment 
of the Economic Classification Policy Committee (ECPC) by OMB and set 
out its charter including a ``fresh slate'' examination of economic 
classifications for statistical purposes, including industrial 
classifications, product classifications, and product code groupings. 
In a July 26, 1994, Federal Register notice, pp. 38092-38096, OMB 
announced that NAICS was being developed in cooperation with Statistics 
Canada and INEGI and requested comments on that decision as well as 
requesting public comments on the structure of the system. That notice 
also included the concepts of the new system and the principles upon 
which it would be developed. Those are as follows:
    (1) NAICS will be erected on a production-oriented, or supply-
based, conceptual framework. This means that producing units that use 
identical or similar production processes will be grouped together in 
NAICS.
    (2) The system will give 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 will be maintained to the extent 
possible. However, changes in the economy and proposals from data users 
must be considered. In addition, adjustments will be required for 
sectors where Canada, Mexico, and the United States presently have 
incompatible industry classification definitions in order to produce a 
common industry system for all three North American countries.
    (4) The system will strive for compatibility with the 2-digit level 
of the International Standard Industrial Classification of All Economic 
Activities (ISIC, Rev. 3) of the United Nations.
    The structure of NAICS was developed in a series of meetings among 
the three countries. NAICS is organized in a hierarchical structure, 
much like the existing U.S. SIC. The 1987 SIC employs a 4-digit coding 
system, in which the first two digits designate what in NAICS is known 
as a ``subsector,'' the third digit designates the industry group, and 
the fourth digit designates the industry. For example, in the 1987 SIC, 
the two digits 26 designate the manufacture of ``Paper and Allied 
Products,'' within which the digits 262 designate an industry group 
titled ``Paper Mills,'' which contains one 4-digit industry, SIC 2621, 
also titled ``Paper Mills.''
    The NAICS coding system must be expanded beyond the four digits 
used in the SIC for two reasons. First, the NAICS agreements among the 
ECPC, INEGI, and Statistics Canada permit each country to designate 
detailed industries, below the level of a NAICS industry, to meet 
national needs. The United States will have such national industry 
detail in many places in the new classification, and this national 
detail can only be accommodated by expanding the coding system to at 
least five characters. In the U.S. NAICS, the sixth digit designates 
the U.S. detailed national industries.
    Second, it is desirable that the first character or characters in a 
coding system designate the sector (the NAICS term ``industry sector'' 
is replacing the term ``division'' used in the 1987 SIC). A modern 
economy is too complex to be described adequately if the first 
character of the coding system restricts the number of sectors to nine 
or ten. For example, the ECPC is recommending that NAICS have 20 
industry sectors. Accordingly, the first two digits are used to 
designate the sector in NAICS.
    The ECPC is recommending a six digit coding system in which the 
first two digits designate the NAICS sector, and the third, fourth, 
fifth, and sixth digits designate, respectively, the subsector, 
industry group, NAICS industry, and U.S. national industry (if any). 
Though the 1997 U.S. NAICS industries will now have six digits compared 
to four digits for 1987 SIC industries, there will not be a 
corresponding increase in the level of classification detail that the 
1997 NAICS provides compared to the 1987 SIC. As explained above, the 
two additional digits are simply the result of allowing for more 
sectors and for individual country-level detail.
    Public proposals for individual industries from all three countries 
were considered for acceptance if the proposed industry was based on 
the production-oriented concept of the system.
    In response to the July 26, 1994, notice, the ECPC received 125 
public responses to the call for proposals for new and revised 
industries, plus 8 responses from 6 State government agencies, and 9 
responses from 6 Federal Government agencies. These formal responses to 
the July 26, 1994, Federal Register notice contained several hundred 
proposals. Additional proposals and suggestions for change arose from 
the extensive ECPC public outreach program, which consisted of meetings 
and other communications with industry, data user, and data respondent 
groups. Other proposals for modifications such as changing industry 
definitions and clarifying boundaries, came from U.S. statistical 
agency personnel who worked on NAICS, reflecting accumulated public 
comments and criticism, over a number of years, of the U.S. SIC system. 
A number of proposals to eliminate U.S. industries, or to combine them 
with other industries, were also received.
    Comments to the ECPC from all these sources ranged over many 
aspects of the 1987 SIC system. For example, approximately 20 percent 
of the formal letters received concerned ambiguities in the titles and 
definitions of the 1987 SIC industries, and incomplete or out of date 
product lists. Over 40 respondents requested more and better-defined 
product detail within existing industries, without necessarily 
requesting changes to industry boundaries. These requests and

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suggestions are being handled through the redesign of forms where 
product information is collected in the 1997 Economic Censuses.
    Another group of responses to the notice were proposals for ``a 
separate, market-oriented product grouping system'' (Federal Register, 
July 26, 1994, p. 38095), to be put in place following the 1997 
Economic Censuses. Some proposals that were submitted as industry 
proposals were, after analysis by the ECPC, found more appropriately to 
be market groupings, and have been held over for future action.
    After accounting for the public responses in the above categories, 
a high proportion of the proposals for new industries made to the ECPC 
were accepted. When a proposal was not accepted, it was usually 
because: (a) the resulting industry would have been too small in the 
U.S.; (b) data indicated that the specialization ratio was low (the 
specialization ratio indicates to what extent the establishments in a 
given industry concentrate on the activities that define the industry); 
or (c) the proposal did not meet the production-oriented criterion for 
forming an industry in NAICS.
    Proposals were also received for changing or modifying the 
boundaries of existing industries, without necessarily creating a new 
industry. In addition, changes to 1987 SIC industry definitions were 
frequently required to bring about compatibility with the Canadian and 
Mexican classifications (as were corresponding changes in those 
countries' classification systems). Those changes are listed and 
described in the four Federal Register notices that described the 
proposed NAICS system. Some changes that were required for 
international compatibility interacted with proposed changes from the 
U.S. public, and in some cases the two kinds of changes forced a 
broader rethinking of the entire portion of the structure. The results 
of the ECPC's examination of the U.S. classification system, and its 
work with INEGI and Statistics Canada to form a new North American 
system, are presented in the series of Federal Register notices listed 
above, culminating in the July 5, 1996, Federal Register notice, pp. 
35384-35515, that contains the full NAICS system as originally proposed 
by the ECPC.
    In response to the last four Federal Register notices containing 
various sections of the proposed classification system, which was 
summarized in the July 5, 1996, Federal Register notice, the ECPC 
received approximately 400 additional comments. Each comment was 
considered in preparing the revised structure that the ECPC is now 
recommending for adoption. In the discussion below in the Significant 
Comments or Changes section, these four Federal Register notices, as 
summarized in the July 5, 1996, notice, serve as the base proposal 
against which changes in response to comments are noted. The ECPC also 
consulted with INEGI and Statistics Canada regarding the comments 
received and discussions were held to incorporate the necessary changes 
into the new system.
    A significant number of comments supported the development of 
NAICS, expressed the view that NAICS is a significant improvement over 
the SIC system, or supported the inclusion in NAICS of specific 
industries. Other comments included offers to help write the detailed 
descriptions of certain industries. There were also a number of 
comments remarking on the need to ensure time series comparability, in 
the transition from the SIC system to NAICS.
    Approximately 10 percent of the comments received requested 
clarification of a concept or industry title--for example, comments 
requesting further elaboration or explanation of some of the industries 
proposed; interpretation of the boundaries of some of the proposed 
industries; or requests for changes to titles of proposed industries. 
The ECPC subcommittees are communicating with these respondents via 
telephone, e-mail, or personal meetings to answer these kinds of 
questions. This process will continue over the next several months.
    There were only a few comments regarding the proposed coding 
system. As discussed above, the NAICS codes requires additional digits 
beyond the four digits used in the SIC system. The first extra digit 
permits NAICS to have more than 10 sectors and to build the sector into 
the coding system; the final digit permits breaking out U.S. national 
industries, where it is important to do so, below the NAICS industry 
level. Four comments supported a 6-digit numeric system while three 
supported an alphanumeric system. Because there was no strong support 
for one system over the other, because both Canada and Mexico support 
the 6-digit system, and because implementing a 6-digit numeric system 
is easier and less expensive for the U.S. statistical system, the ECPC 
recommends the adoption of a 6-digit numeric system.
    About one half of the comments received in response to the proposed 
system related to requests for changes. Many of these comments asked 
for additional industries to be recognized, even though these requests 
were originally due on November 7, 1994. However, the ECPC did consider 
such requests. About 30 percent of these requests were accepted. 
Significant changes made as a result of these comments are discussed 
below. Changes were also made to the proposed structure based on 
further study and additional information about the proposed industries 
received by the ECPC subcommittees. Still other changes are the result 
of comments from Canadian and Mexican users of the new system. These 
too are noted below.
    There also are a number of title changes to better describe the 
contents of the industries. Title changes are reflected in Table 1. 
Some revisions are made to the numerical codes for industries as 
published in the July 5, 1996, Federal Register notice. These changes 
were made to present a more logical sequencing of the industries in the 
coding system; to account for new industries and changes to industries 
as a result of the Federal Register comments; and to account for the 
new sector added to the structure. In addition, because there is not 
three country agreement for detailed industries in some of the sectors 
(construction, utilities, wholesale trade, retail trade, and public 
administration), the three countries have assigned different numbers to 
these sectors to signify that the industries are not comparable across 
the three countries.
    The ECPC received a number of comments that suggested changes to 
NAICS that were not accepted. All of these suggestions were carefully 
considered. Some of the suggestions were modified at the request of the 
ECPC to better meet the objectives of NAICS. Others were suggestions 
for products that will be considered in the future development of a 
product system. Other suggestions for change could not be justified on 
a production basis, or could not be implemented in statistical 
programs, for a variety of reasons, and thus were not accepted. The 
ECPC is currently preparing a response for each of these suggestions, 
carefully explaining why they were not accepted.

Significant Comments or Changes

    Agriculture, Forestry, Fishing, and Hunting--Major industry 
associations objected to moving cotton ginning from agriculture to 
manufacturing. They argued that cotton ginning is not a manufacturing 
process, but rather a service to the agriculture sector. The ECPC 
agreed with the arguments and cotton ginning is moved to agriculture 
and shown as NAICS code 115111.
    The Root, Tuber, and Peanut Farming industry group is deleted 
because the production process of that industry

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group can not be easily differentiated from that of the Vegetable and 
Melon Farming industry group. Potato farming is now included with 
Vegetable and Melon Farming as a U.S. national industry and peanut and 
sugar beet farming are U.S. national industries under Other Crop 
Farming.
    At the request of Mexico, poultry hatcheries and other poultry 
production are elevated to NAICS five-digit industries. No change is 
implied for the U.S. national industry structure. U.S. national 
industries are added for Oilseed and Grain Combination Farming, and 
Fruit and Tree Nut Combination Farming to account for those farms that 
carry out a range of activities. All other combination farming will be 
classified in All Other Crop Farming. These activities were not 
accounted for in the original structure as published in the July 5, 
1996 Federal Register notice.
    Manufacturing--A number of new U.S. national industries were 
created at the request of industry groups. All of these new industries 
are large, production based industries that cannot be recognized 
separately by either Canada or Mexico. These industries are Bottled 
Water Manufacturing; Secondary Smelting, Refining and Alloying of 
Copper; Nonferrous Metals (except Copper and Aluminum) Rolling, 
Drawing, and Extruding; Secondary Smelting, Refining and Alloying of 
Nonferrous Metals (except Copper and Aluminum); Printed Circuit/
Electronics Assembly Manufacturing; and Light Truck and Utility Vehicle 
Manufacturing.
    NAICS industry group 3116, Meat and Seafood Product Manufacturing, 
is split into two industry groups at the request of the province of 
Newfoundland. The production processes for meat and seafood products 
are significantly different, and the size of these industries in all 
three countries allow for the creation of two industry groups as 
follows: 3116, Meat Product Manufacturing, and 3117, Seafood Product 
Preparation and Packaging. NAICS 3117, Bakeries and Tortilla 
Manufacturing, is renumbered 3118.
    U.S. NAICS 312142, Ethyl Alcohol Manufacturing, is moved to NAICS 
32519, Other Organic Chemical Manufacturing, and a new U.S. NAICS 
industry, 325193 Ethyl Alcohol Manufacturing, is established. An error 
was made in placing ethyl alcohol for nonfood uses in the food 
industries.
    The sequencing of subsector 315, Apparel Manufacturing, is changed. 
NAICS 3151 is revised to represent Apparel Knitting Mills; NAICS 3152 
is Cut and Sew Apparel Manufacturing; and NAICS 3159 is Apparel 
Accessories and Other Apparel Manufacturing. The NAICS agreement is now 
at the industry group level and comparable data will be shown by all 
three countries for NAICS 3151, 3152, and 3159. The United States and 
Canada, however, are establishing comparable industries below the 
industry group level. These industries are: 31521, Cut and Sew Apparel 
Contractors; 31522, Men's and Boys' Cut and Sew Apparel Manufacturing; 
31523, Women's and Girls' Cut and Sew Apparel Manufacturing; and 31529, 
Other Cut and Sew Apparel Manufacturing. The country-level six digit 
detail for Canada and the U.S. also is comparable where possible. Since 
the fabric for knit apparel garments is first knit and then may be cut 
and sewn, grouping apparel knitting mills before cut and sew 
manufacturers is a more logical grouping in the production process. 
Mexico requested that the NAICS distinction for contractors be dropped 
since that distinction was difficult for them to make, but it is 
retained as shown above for Canada and the U.S.
    The Wood Product Manufacturing subsector is restructured. 
Specifically, NAICS 3212, Laminated Wood Product Manufacturing, is 
retitled Veneer, Plywood, and Engineered Wood Product Manufacturing 
because this title better reflects terminology used within the 
industry. Truss Manufacturing is moved to industry group 3212 from 
industry group 3219, Other Wood Product Manufacturing. Truss 
Manufacturing is now represented by U.S. NAICS code 321214. NAICS 
industry group 32191, Wood Construction Product Manufacturing, is 
retitled Millwork. These changes are made to reflect the new and 
emerging industry of engineered wood and to more accurately reflect the 
production processes used in the manufacture of trusses. The products 
included in NAICS 32191, Millwork, are made from wood that is sawn and 
molded into wood products such as doors, windows, flooring, etc. Truss 
manufacturing is much more than just sawing and/or molding a product. 
Truss manufacturing involves fabricating (including laminating) wood 
into various configurations that meet certain endurance and structural 
requirements. Design of the truss to meet these requirements is 
extremely important. Many times metal pieces are affixed to the end. 
Trusses are made more like other products included in NAICS industry 
group 32121, Veneer, Plywood, and Engineered Wood Product 
Manufacturing, than they are like those produced in 32191, Millwork.
    The ordering and title of subsector 326, Rubber and Plastics 
Product Manufacturing, is changed. The new title is Plastics and Rubber 
Product Manufacturing and NAICS industry group 3261 now represents 
Plastics Product Manufacturing while 3262 represents Rubber Product 
Manufacturing. This change was done to reflect the order in terms of 
the size of the two industries.
    A number of changes are made to NAICS industry group 331, Primary 
Metal Manufacturing. Specifically, the title of U.S. national industry 
331312, Primary Refining of Aluminum is changed to Primary Aluminum 
Production. The trade association pointed out that the original title 
was incorrect and should be changed. The titles for industry group 3313 
and NAICS industry 33131, Smelting, Refining, Rolling, Drawing and 
Extruding of Aluminum, are changed to Alumina and Aluminum Production 
and Processing. This shortens the title and provides a better 
description of the content of the industry group and industry. The term 
alloying is added to U.S. national industries 331314, Secondary 
Smelting and Refining of Aluminum; and 331413, Secondary Smelting and 
Refining of Nonferrous Metals (renumbered and retitled 331492, 
Secondary Smelting, Refining, and Alloying of Nonferrous Metals (except 
Copper and Aluminum). The addition of the term alloying clearly 
designates that the alloying activity is included in these industries.
    NAICS industry groups 3326, Spring, Wire, and Turned Product 
Manufacturing, and 3327, Machine Shops and Coating, Engraving, Heat 
Treating and Allied Activities, are restructured to better reflect the 
production process of the industries included in the industry groups. 
Specifically, the trade association pointed out that the production 
processes for machine shops and turned product manufacturing are 
similar and often the same, using the same type of machinery. The only 
difference is that machine shops usually produce on a small scale 
special or ``job'' order basis, while turned product manufacturing 
establishments usually produce on a large scale basis or ``mass 
produce.'' Thus, turned product manufacturing should be grouped with 
machine shops rather than with spring and wire product manufacturing. 
Turned product manufacturing then is moved from industry group 3326 now 
titled, Spring and Wire Product Manufacturing, to industry group 3327, 
now titled Machine Shops, Turned Product, and Screw, Nut, and Bolt 
Manufacturing.

[[Page 57010]]

NAICS industry, 33272, Coating, Engraving, Heat Treating and Allied 
Activities, and the U.S. national industries 332721, Metal Heat 
Treating; 332722, Metal Coating, Engraving and Allied Services to 
Manufacturing (except Jewelry and Silverware); and 332723, 
Electroplating, Plating, Polishing, Anodizing and Coloring, are moved 
to a new NAICS industry group 3328, Coating, Engraving, Heat Treating, 
and Allied Activities. The NAICS industry has the same title and no 
changes are made to the U.S. detail except for the following title 
changes: 332822, Metal Coating, Engraving, and Allied Services to 
Manufacturing (except Jewelry and Silverware).
    Water coolers are moved from NAICS 33522, Major Appliance 
Manufacturing, to NAICS 33341, Heating, Ventilating, Air-Conditioning, 
and Commercial Refrigeration. Water coolers are made by establishments 
also producing heating, ventilating, air-conditioning, and commercial 
refrigeration, not major appliance manufacturers.
    Writing, drawing, artists and stamp pad inks are moved from NAICS 
industry 32591, Printing Ink Manufacturing, to 32599, Other 
Miscellaneous Chemical Product Manufacturing (retitled All Other 
Chemical Product Manufacturing). Establishments producing printing ink 
do not also produce writing, drawing, artists and stamp pad inks and 
the production processes are different.
    To clarify the placement of some activities, toners are included in 
NAICS 32599, Other Miscellaneous Chemical Product Manufacturing 
(retitled All Other Chemical Product Manufacturing) while ink jet or 
bubble jet inks and electrostatic inks are included in NAICS 32591, 
Printing Ink Manufacturing. The manufacturing of these products is 
classified according to the production process based on a study to 
determine which manufacturers are making these products.
    Foam products made from materials other than polystyrene and 
urethane are included in NAICS 32625, Urethane Foam Product 
Manufacturing, now titled Urethane and Other Foam Product (except 
Polystyrene) Manufacturing. No allowance was originally made for foam 
products from materials other than polystyrene and urethane.
    A new NAICS industry is created for sign manufacturing. Sign 
manufacturing in the NAICS structure published on July 5, 1996, was 
dispersed throughout the manufacturing subsectors based on component 
material. However, the trade association pointed out that sign 
manufacturing is a special production process and establishments do not 
specialize in sign making by type of material. Rather, they make signs 
from any material based on customer specifications. Therefore, NAICS is 
restructured to establish a separate sign manufacturing industry, 
33995, Sign Manufacturing.
    Gasket manufacturing is moved to NAICS 33999, All Other 
Miscellaneous Manufacturing, and a new U.S. national industry is 
created, 339991, Gasket Manufacturing. As with sign manufacturing, 
NAICS originally classified gasket manufacturing according to component 
material. However, further study indicates that producers of gaskets do 
not specialize by type of material, but rather produce gaskets of many 
materials in the same establishment. Therefore, a separate U.S. 
national industry is established for gasket manufacturing.
    Reconditioning of barrels and drums is moved from NAICS 332499, 
Other Metal Container Manufacturing, to NAICS 81121, Heavy and 
Industrial Machinery Equipment and Repair. The industry association 
pointed out that the chief activity in reconditioning barrel and drum 
establishments is cleaning and repainting or refinishing barrels and 
drums. Used drums are obtained and cleaned using a chemical cleansing 
solvent or a burning process is used to burn out impurities. The drums 
are then painted or coated according to the customer's specification. 
Since cleaning and repainting is the main activity of these 
establishments, the activity more logically fits in the repair and 
maintenance subsector.
    Automotive and truck air conditioning compressors and systems 
(excluding unitary systems and mechanical refrigeration equipment) is 
moved from U.S. NAICS 333415, Air Conditioning and Warm Air Heating 
Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing, to NAICS industry 33639, Other Motor Vehicle Part 
Manufacturing. A U.S. national industry, 336391, Motor Vehicle Air 
Conditioning Manufacturing is added. The proposed industry is well 
defined and highly specialized. The manufacture of this type of air 
conditioning equipment is distinct from other kinds (residential or 
industrial) due to standards required by motor vehicle manufacturers, 
such as size, strength of components, environmental requirements, etc. 
Classifying these motor vehicle parts in the Transportation Equipment 
Manufacturing subsector is consistent with similar decisions made in 
NAICS to group all transportation equipment manufacturing together.
    NAICS industries and the U.S. detail under 33713, Wood Furniture 
Manufacturing; 33714, Metal Furniture Manufacturing, and 33715, Other 
Furniture Manufacturing, are changed. This change is made at the 
request of trade associations in both Canada and the U.S. There are now 
two NAICS industries for furniture. They are 33713, Wood Household 
Furniture Manufacturing and 33714, Non-wood Furniture Manufacturing. 
Within this structure, the U.S. will recognize the following 
industries: 337131, Wood Kitchen Cabinet and Counter Top Manufacturing; 
337132, Upholstered Wood Household Furniture Manufacturing; 337133, 
Wood Household Furniture (except Upholstered) Manufacturing; 337134, 
Wood Office Furniture Manufacturing; 337135, Custom Architectural 
Woodwork and Millwork Manufacturing; and 337139, Other Wood Furniture 
Manufacturing; 337141, Nonwood Office Furniture Manufacturing; 337142, 
Metal Household Furniture Manufacturing; 337143, Household Furniture 
(except Wood and Metal) Manufacturing; 337145, Nonwood Showcase, 
Partition, Shelving, and Locker Manufacturing; and 337148, Other 
Nonwood Furniture Manufacturing. In addition, the three countries 
agreed that each would work towards adopting the complete structure in 
the future. Also convertible sofa manufacturing is moved from NAICS 
33711, Mattress Manufacturing, to 33713, Wood Furniture Manufacturing. 
Convertible sofa manufacturing is not like mattress manufacturing, but 
is furniture manufacturing.
    Quick printing is moved from NAICS 571431 (renumbered 561431), 
Photocopying and Duplicating Services, to NAICS 32311, Printing. A new 
U.S. national industry, 323114, Quick Printing, is established. 
Industry representatives pointed out that quick printing uses inputs, 
labor skills, and capital equipment that are similar to those used in 
traditional printing establishments and therefore should be classified 
in the printing subsector. These establishments do, however, employ 
different production processes than traditional printers and should be 
classified in a separate industry within the printing subsector. Quick 
printing includes any establishment that has an offset printer with a 
maximum paper size less than ``18'' X ``23'' and no other 
``traditional'' type printing equipment such as ``large offset, 
flexographic, screen, etc.'' Also included are establishments that have 
photocopy type equipment and offer prepress

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services; and establishments that have electrostatic digital type 
printers only, that primarily print text type documents. Excluded from 
this industry are establishments known as copy shops, which use only 
photocopy type equipment and do not offer prepress services. These 
establishments remain in U.S. NAICS 561431.
    A new U.S. national industry is created for Digital Printing, U.S. 
NAICS 323115. Digital printing includes establishments that use a 
unique process involving heavy ``front end'' or prepress processing. 
Establishments in this industry use sophisticated scanning equipment 
and powerful computing equipment to prepare computerized input to newly 
developed digital output devices (printers). The products of this 
industry are typically banners, signs, and posters that are generally 
of high quality and large size. They are graphic as opposed to textual 
products. This is a distinct production process that is a new and 
emerging industry that should be recognized in NAICS.
    U.S. NAICS industry 323111, Printing on Apparel, is combined with 
323116, (renumbered 323113) Commercial Screen Printing. Industry 
representatives commented that almost all printing on apparel is screen 
printing and thus a separate industry for printing on apparel should 
not be recognized. Printing on apparel involves the use of the same 
kind of equipment (screen printing machines) and has the same highly 
skilled screen plate labor, and similar raw materials.
    The U.S. national industries within NAICS 32311, Printing, are 
renumbered to reflect the addition of the two industries noted above 
and the deletion of a separate industry for printing on apparel. The 
industries are as follows: 323110, Commercial Lithographic Printing; 
323111, Commercial Gravure Printing; 323112, Commercial Flexographic 
Printing; 323113, Commercial Screen Printing; 323114, Quick Printing; 
323115, Digital Printing; 323116, Manifold Business Form Printing; 
323117, Book Printing; 323118, Blankbook, Loose-leaf Binder, and Device 
Manufacturing; and 323119, Other Commercial Printing.
    NAICS industries 32721, Glass and Glass Product Manufacturing, and 
32722, Glass Container Manufacturing are combined. The glass container 
manufacturing industry is too small to support in Canada. The U.S. will 
maintain the detail as published in the July 5, 1996, Federal Register 
notice under the new NAICS industry 32721, Glass and Glass Product 
Manufacturing.
    Retail Trade--At the request of industry associations, NAICS 
industry 44823, Accessories Stores (retitled Clothing Accessories 
Stores), is moved to NAICS industry group 4481, Clothing Stores 
(retitled Clothing and Clothing Accessories Stores). As a result of 
that change, NAICS industry group 4482, Jewelry and Accessories Stores, 
is retitled Jewelry, Luggage, and Leather Goods Stores. In addition, 
the sequencing of industry groups 4482 and 4483 is changed so that 4482 
now represents shoe stores and 4483, jewelry, luggage, and leather 
goods stores. These changes were made to ensure that all clothing 
stores are grouped together and to reflect the relative importance of 
the industries within the industry group.
    Transportation--In the Federal Register published on July 5, 1996, 
warehousing was shown as an industry group within subsector 488, 
Support Activities for Transportation. Industry associations pointed 
out that warehousing is not a support activity only for transportation; 
a modern warehouse provides not only storage, but other services, 
including inventory control, and provides them to many using 
industries. Further, they indicated that warehousing is such an 
important activity in all three NAICS countries that NAICS should 
reflect industries for general warehousing and storage. All three 
countries agreed with this description of the warehousing industry and 
the following changes are made: sector 48-49 is retitled Transportation 
and Warehousing and the former industry group 4886, Storage Facilities, 
is elevated to a subsector and retitled Warehousing and Storage 
Facilities. U.S. national detail industries 488691, General Storage 
Facilities, and 488699, All Other Storage Facilities, are elevated to 
five-digit NAICS industries and retitled General Warehousing and 
Storage Facilities and All Other Warehousing and Storage Facilities, 
respectively. The new subsector is 493, Warehousing and Storage 
Facilities.
    Information--NAICS industry 51213, Teleproduction and Other Post 
Production Services, is combined with NAICS 51219, Other Motion Picture 
and Video Industries, and 51219 is retitled Post Production and Other 
Motion Picture and Video Industries. The U.S. establishes a 6-digit 
national industry 512191, Teleproduction and Other Post Production 
Services, for this industry. The combination is made at the NAICS level 
because the industry is not large enough in Canada to recognize as a 
separate NAICS industry.
    Finance and Insurance--U.S. industry group 5251, Holding Companies, 
is moved to a new sector called Management of Companies and 
Enterprises, NAICS 55. See the explanation of this sector below for a 
description of the industries to be included in the new sector.
    NAICS 52411 is expanded to include both life and health insurance 
establishments. The industry 52411 is retitled Direct Life, Health, and 
Medical Insurance Carriers and NAICS 52412 is retitled Direct Insurance 
Carriers (except Life, Health, and Medical). The U.S. national detail 
shows the following industries under each: 524111, Direct Life 
Insurance Carriers; 524112, Direct Health and Medical Insurance 
Carriers; 524121, Direct Property and Casualty Insurance Carriers; 
524122, Direct Title Insurance Carriers; and 524129, Other Direct 
Insurance Carriers (except Life, Health, and Medical). This change was 
requested by Canada because of the structure of their health insurance 
industry and their inability to separate life insurance carriers from 
health and medical insurance carriers.
    Real Estate; Rental and Leasing--A separate industry group is 
created for NAICS 55122, Offices of Real Estate Agents and Brokers. It 
becomes industry group 5512, Offices of Real Estate Agents and Brokers, 
with one NAICS industry in that industry group, 55121, Offices of Real 
Estate Agents and Brokers. NAICS 5212, Activities Related to Real 
Estate, becomes industry group 5213, Activities Related to Real Estate, 
with the same national detail as published in the July 5, 1996, Federal 
Register notice, except for real estate agents and brokers. This change 
is made to recognize the importance of this industry to real estate and 
to recognize the different production process of the industry.
    U.S. NAICS 531291, Title Abstract Offices, is moved to U.S. NAICS 
541191, Title Abstract and Settlement Offices, in the Professional, 
Scientific, and Technical Services sector under industry 56119 
(renumbered 54119), Other Legal Services. Title abstract offices 
provide a type of legal services and thus ``fit'' better in the legal 
services industry group.
    Condominium associations are moved to NAICS 81399, All Other 
Organizations. Some of these organizations provide property management 
services, but others do not. In the U.S., it is not possible to 
separate the two types of organizations, so it was decided to place 
them all in 81399.
    With the changes to offices of real estate agents and brokers, 
title abstract offices, and condominium associations, agreement is 
reached with Canada and Mexico on the structure of the real estate 
subsector at the industry group level, though not at the NAICS industry

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level. The previously published structure would not have provided 
common North American data for this subsector.
    U.S. NAICS industry 532212, Home and Garden Equipment Rental is 
deleted. A new industry group 5323, General Rental Centers, is created 
and any establishments primarily renting home and garden equipment and/
or a wide range of consumer, and commercial/industrial equipment is 
included. A new NAICS industry, 53231, General Rental Centers, is also 
created. Very few establishments primarily rent home and garden 
equipment. Rental of these items is done either by hardware stores or 
``rental centers'' that rent many different types of equipment, both 
home and garden and other consumer and commercial/industrial equipment. 
Therefore, the U.S. industry for home and garden equipment rental is 
deleted.
    Professional, Scientific, and Technical Services--The sector has 
been renumbered 54 from 56. This renumbering was done to provide for a 
more logical sequencing of the numbers. Therefore, the first two digit 
of all numbers within this subsector now are 54.
    NAICS industry group 5612 (renumbered 5412) Accounting, Tax 
Preparation, Bookkeeping and Payroll Services is restructured. NAICS 
industries 56121, Offices of Accountants, and 56122, Tax Preparation, 
Bookkeeping, and Payroll Services are deleted. U.S. national industries 
561212, Offices of Accountants, Except Certified, and 561222, 
Bookkeeping and Billing Services, are also deleted. It was determined 
in writing descriptions for these industries that many of the 
activities outlined in the tax preparation, bookkeeping, and payroll 
services industries also were performed by accountants. A clear 
distinction between the industries could not be made. Therefore, the 
industry group is restructured to include only one NAICS industry 
54121, Accounting, Tax Preparation, Bookkeeping and Payroll Services. 
Four national industries are included in this NAICS industry as 
follows: 541211, Offices of Certified Public Accountants; 541212, Tax 
Preparation Services; 541213, Payroll Services; and 541219, Other 
Accounting Services.
    NAICS industry group 5613 (renumbered 5413), Architectural, 
Engineering, and Related Services, is reordered to include NAICS 56135 
(renumbered 54132), Landscape Architectural Services, after 56131 
(renumbered 54131), Architectural Services. Industry groups pointed out 
that landscape architecture firms perform design services comparable to 
architectural and engineering firms and grouping them in sequence 
reflects the similarities in process among them. Industry group 5413 is 
structured as follows: 54131, Architectural Services; 54132, Landscape 
Architectural Services; 54133, Engineering Services; 54134, Drafting 
Services; 54135, Building Inspection Services; 54136 Geophysical 
Surveying and Mapping Services; 54137, Survey and Mapping (except 
Geophysical) Services; and 54138, Testing Laboratories.
    U.S. NAICS industries 561491, Land Use Planners Services, and 
561499, All Other Design Services, are deleted. Land use planning 
services are now included with 54132, Landscape Architectural Services. 
It was pointed out by an industry association that there are not 
specialized establishments providing land use planning services; 
rather, this is an activity normally carried out by landscape 
architects. That activity is therefore included with NAICS 54132, 
Landscape Architectural Services.
    Management of Companies and Enterprises--A new sector is created 
that includes holding companies and corporate, subsidiary, and regional 
managing offices. All of these establishments are engaged in the 
management of large, multiple establishment companies and do not fit 
logically into the structure of any of the other NAICS sectors. Within 
the new sector the U.S. will recognize three national industries 
551111, Bank Holding Companies; 551112, Other Holding Companies; and 
551113, Corporate, Subsidiary, and Regional Managing Offices. The three 
countries recognized that holding companies are economic entities with 
employees and receipts that should be recognized in NAICS and not 
included in the U.S. only subsector 525, Funds, Trusts, and Other 
Financial Vehicles. See the section on auxiliaries below for a full 
description of the corporate, subsidiary, and regional managing office 
industry.
    Management, Support, Waste Management, and Remediation Services--
The sector is renumbered 56 from 57. This renumbering was done to 
provide for a more logical sequencing of the numbers and to accommodate 
the new sector described above. Therefore, the first two digits of all 
numbers within this subsector now are 56. The sector is also retitled 
Administrative and Support, Waste Management and Remediation Services 
to distinguish it from the new sector Management of Companies and 
Enterprises.
    Farm management and construction management are moved to the 
agriculture and construction sectors, respectively. The activities 
carried out in these establishments require specialized knowledge of 
the agriculture and construction industries and are not in any way like 
the activities in NAICS 57111, Management Services (now renumbered and 
retitled 56111, Office Administrative Services), where they were 
originally classified. New NAICS 56111, Office Administrative Services, 
now includes only those establishments that are primarily engaged in 
providing office administrative services, a much more homogeneous 
grouping.
    U.S. national industries 571731, Lawn and Garden Services, and 
571732, Ornamental Shrub and Tree Services, are deleted. There is no 
clear distinction between the activities of the establishments included 
in these industries since many establishments that care for shrubs and 
trees also provide lawn and garden services. It is also true that 
establishments that provide lawn services care for shrubs and trees.
    A question was raised by an industry group on the placement of 
landscape installation services. That activity is included in NAICS 
57172 (renumbered 56172), Landscape Care and Maintenance, which is 
retitled Landscape Services.
    NAICS industry 57112, Facilities Support Management, is elevated to 
an industry group. This is a U.S. only activity and is very different 
from the activities included in NAICS 57111 (renumbered 56111), 
Management Services (retitled Office Administrative Services), with 
which facilities support management was grouped. The new industry group 
and industry are 5612, Facilities Support Services, and 56121, 
Facilities Support Services.
    Educational Services--U.S. NAICS industry 611512, Vocational and 
Technical Schools, is combined with U.S. NAICS industry 611519, Other 
Technical and Trade Schools. No distinction can be made between these 
two industries so they are combined.
    The comparability among the three countries for NAICS 6111, 
Elementary and Secondary Schools, is at this industry group level. 
Mexico needs additional industries that can only be accommodated if 
NAICS comparability is at the industry group level. This does not 
affect the U.S. structure.
    Health Care and Social Assistance--U.S. NAICS industry 621611, Home 
Health Agencies, is combined with U.S. NAICS industry 621619, Other 
Home Health Care Services. No distinction

[[Page 57013]]

between these two industries can be made so they are combined.
    Arts, Entertainment, and Recreation--NAICS industry group 7131, 
Operators of Sports and Recreation Facilities, is deleted and those 
NAICS industries formerly included in this industry group are move to 
NAICS industry group 7139 retitled Other Amusement and Recreation 
Industries. The following NAICS industries are included under that 
industry group: 71391, Golf Courses and Country Clubs; 71392, Skiing 
Facilities; 71393, Marinas; 71394, Fitness and Recreational Sports 
Centers; 71395, Bowling Centers; and 71399, All Other Amusement and 
Recreation Industries. NAICS 7132, Amusement Facilities, is renumbered 
7131 and retitled Amusement Parks and Arcades. Establishments providing 
coin-operated amusement devices are now in 71399, All Other Amusement 
and Recreation Industries. An industry group pointed out that the 
production processes of amusement parks and arcades is much different 
from that of those establishments only providing coin-operated 
amusement devices for use by amusement parks and arcades. NAICS 
industries in 7131 are 71311, Amusement and Theme Parks, and 71312, 
Amusement Arcades. NAICS 7133, Gambling Industries, is renumbered 7132. 
The industries in 7132 remain the same but are renumbered 71321, 
Casinos (except Hotel Casinos), and 71322, Other Gambling Industries.
    Accommodation and Food Services--NAICS industry 72222, Refreshment 
Places, is deleted. Therefore, this NAICS industry will be shown as 
U.S. national industry 722213, Snack and Nonalcoholic Beverage Bars. 
Neither Mexico nor Canada could support this as a NAICS industry, but 
U.S. comments indicated that snack and nonalcoholic beverage bars are 
an important industry that should be recognized in the U.S.
    Other Services, Except Public Administration--U.S. NAICS industry 
811211, Transportation Equipment Repair and Maintenance, is combined 
with U.S. industry 811212, Other Industrial Machinery and Equipment 
Repair and Maintenance (renumbered and retitled 81131, Commercial and 
Industrial (except Automotive and Electronic) Machinery and Equipment 
Repair and Maintenance). There are very few establishments primarily 
engaged in repairing and maintaining transportation equipment (except 
automotive) since most of the repairs are done at the factory or by the 
establishment that owns and uses the equipment. Therefore, this 
industry is too small to recognize separately and is combined with 
other industrial machinery and equipment repair and maintenance. The 
sequencing of NAICS industry groups 8112, Heavy and Industrial 
Machinery and Equipment Repair and Maintenance (retitled Commercial and 
Industrial (except Automotive and Electronic) Machinery and Equipment 
Repair and Maintenance), and 8113, Electronic and Precision Equipment 
Repair and Maintenance, is changed. NAICS 8112 now represents 
Electronic and Precision Equipment Repair and Maintenance and 8113 is 
Commercial and Industrial (except Automotive and Electronic) Machinery 
and Equipment Repair and Maintenance.
    U.S. NAICS industries 813411, Civic and Social Organizations with 
Restaurants and Bars, and 813412, Civic and Social Organizations 
without Restaurants and Bars, are combined. These establishments are 
small and difficult to classify.

Auxiliaries

    In the 1987 SIC, auxiliary units, defined as those units that 
primarily produce support services not intended for use outside the 
enterprise, are classified to industries based on the industry 
classification of the establishments they serve--not the auxiliaries' 
primary activity. However, establishments that produce goods for use by 
other units of the same enterprise are classified based on what they 
do, not whom they serve. The traditional treatment of auxiliary units 
implies that captive services producing establishments should be 
treated differently from captive goods producing units. For example, a 
computer services establishment of an automobile producer that performs 
services for its automobile assembly plants is classified in the 
automobile industry. However, if the automobile producer has a captive 
automotive hose and belting establishment, that establishment is 
classified into the rubber and plastic hose and belting industry, and 
not into the automobile assembly industry.
    As production activities have become more diverse, complex, and 
integrated, the classification of auxiliary operations has taken on 
more and more qualifiers and it has become increasingly difficult to 
discern to which using industry the auxiliary establishment should be 
coded. In a multi-national conglomerate, a ``central office'' may serve 
a variety of establishments, each classified to a different industry. 
In addition, the type of personnel employed and the service performed 
are generic and can transfer from servicing a manufacturing operation, 
to a retailer, to a government operation with little or no conversion 
costs. The geographic locations of central management units tend to be 
similar, usually appearing in or near large cities, and unrelated to 
the location of the activity serviced. As a result, for example, users 
of the U.S. economic censuses are typically surprised to find mining 
industry employment in Washington, D.C., which has no mining activity.
    Another recent phenomenon that has complicated the treatment of 
auxiliaries is the practice of many auxiliaries of selling their 
services to establishments outside the enterprise after their 
intracompany responsibilities are met. For example, in the 1987 
Economic Censuses, auxiliaries had $64 billion of receipts from 
customers outside the parent company. By 1992, that amount had grown to 
$141 billion, making these support establishments one of the fastest 
growing services providers in the economy. And yet, these dollars are 
not being shown in most industry series.
    There are also inconsistencies in industry data published by the 
Bureau of Labor Statistics (BLS) and the Census Bureau, much of which 
is due to the treatment of auxiliaries. The BLS publishes wage and 
employment information by 1987 SIC for all industries, excluding 
agriculture and public administration. These data include industry 
statistics for both operating and auxiliary establishments classified 
to a 4-digit industry. The Census Bureau, on the other hand, which 
publishes receipts and expenditures information by 1987 SIC for 
industries excluding agricultural services, railroads, and public 
administration does not always include auxiliary establishments. In 
addition, Census does not classify auxiliaries down to the 4-digit 
industry level.
    As a result of the difficulties in classifying auxiliaries, 
substantial differences exist in BLS and Census data. For example, in 
manufacturing, Census reports show more than a half million more 
workers in auxiliaries than does BLS. For Finance, Insurance, and Real 
Estate, and Services, on the other hand, BLS counts of auxiliary 
employment exceeds Census'.
    These same differences and more exist in the treatment of 
auxiliaries among the three countries. A more complete explanation of 
the treatment of auxiliaries in the three countries and the problems 
created in industrial statistics by the past treatment of auxiliaries 
is contained in a paper ``The Treatment of Auxiliary Establishments in 
Industry Classification Systems,'' by Paula Young and Jack Triplett of 
the Bureau of

[[Page 57014]]

Economic Analysis. A copy of that paper can be obtained by calling 
(202) 606-9615 or through the Internet (please see the Electronic 
Availability section, above).
    Because of the many problems and complexities in the treatment and 
coding of auxiliaries, it was necessary to develop a principle about 
auxiliaries that would provide for more consistent treatment of these 
activities, both within the United States and among the three 
countries. The following statement, with respect to captive units 
(auxiliaries) was agreed upon by the statistical agencies of the three 
countries: ``The three countries agree that, in accordance with the 
production-oriented conceptual framework for NAICS, those units that 
carry out captive activities for the enterprise to which they belong 
shall be classified to the extent feasible according to the NAICS code 
related to their own activity, as well as, if possible, to that of the 
enterprise they support.''
    This means that in the 1997 Economic Censuses auxiliary units will 
be included in the industry which describes the primary activity in 
which they are engaged. Warehouses that provide storage facilities for 
their own enterprise will be classified as a warehouse, and not as an 
automobile assembly plant (if that is the primary unit they serve). For 
1997, the Bureau of the Census will code these establishments to both 
their own activity and to the primary activity they serve so that links 
can be made to prior census data.
    This change will result in significant shifts in employment data. 
In 1992, Census data showed over 1,000,000 auxiliary employees assigned 
to manufacturing and over 840,000 auxiliary employees assigned to 
retail trade. These employees will most likely move to either the 
Management of Companies and Enterprises sector; the Warehousing and 
Storage subsector; the Computer Systems Design and Related Services 
subsector; the Accounting, Tax Preparation, Bookkeeping and Payroll 
Services subsector; or some other services related subsector.

Time Series Continuity

    The standard approach to preserving time series continuity after 
classification revisions is to create linkages where the series break. 
This is accomplished by producing the data series using both the old 
and new classifications for a given period of transition. With the dual 
classifications of data, the full impact of the revision can be 
assessed. Data producers then may measure the reallocation of the data 
at aggregate industry levels and develop a concordance between the new 
and old series for that given point in time. The concordance creates a 
crosswalk between the old and new classification systems. Links between 
the 1987 U.S. SIC and NAICS (with U.S. national detail) are being 
planned by statistical agencies in the U.S.

ECPC Recommendations for the Hierarchical Structure, Industries, 
and Coding System for the 1997 NAICS

    Table 1 below presents the ECPC final recommendations for the 
entire structure of the proposed classification system for the United 
States including both NAICS and non-NAICS industries. It shows the 
proposed 1997 hierarchy, including NAICS and U.S. national detail 
industries, and the proposed coding system in 1997 NAICS sequence and 
relates the 1997 NAICS to the 1987 SIC. All ECPC recommended changes to 
the structure based on public comment and discussions with INEGI and 
Statistics Canada are included in Tables 1 and 2. Table 2 is in 1987 
SIC sequence and relates the 1987 SIC to the 1997 NAICS.

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[FR Doc. 96-28087 Filed 11-4-96; 8:45 am]
BILLING CODE 3110-01-C