Question

Explain the North American industry classification system, what does each new number added tell you. (short answer)

Answer 1

A NAICS (pronounced NAKES) acronym is a North American Industry Classification System classification. Federal Statistical Agencies developed the NAICS Program for use in gathering, analyzing and reporting statistical data relevant to the US economy.

It was introduced in 1997, in collaboration with Canada and Mexico's statistical authorities, to replace the Standard Industrial Classification (SIC) system. Their goal was to set a standard for North America. As the first economic classification system, they developed the NAICS based on a single economic concept. NAICS is a self-assigned system; you are not assigned a NAICS code by anyone. What this means is that an organization chooses the code that best describes its primary business operation and then uses it when its software is requested. If you have more than one Unique Business Line in your business activities, you may want to use more than one NAICS Code. The system has been developed for statistical analysis, but different government agencies, trade associations, and regulatory boards have adapted the NAICS classification system to meet their internal needs.

Companies also rely on the NAICS code for industry classification of their own customers. Within a common NAICS code, some direct their marketing efforts to businesses. NAICS codes enable them to concentrate on businesses in similar or identical industries in their targeted marketing activities. By acquiring information from NAICS, one can gain a better understanding of their best customers and the industries that could best benefit from their products and services.

Many sectors of NAICS feature combinations of old divisions of SICs, while others are long-neglected economic sectors. For example, NAICS has an information sector that includes all establishments creating, disseminating, or providing the means of distributing information. "So everything from data processing to the film, broadcasting and sound recording industries ended up here, as did magazines, books and newspaper publishers, previously listed as producers, and computer publishers, previously included in SIC services.

Publishing in NAICS — including reporting, writing, and editing — appears in its own right as a major economic activity, while printing remains in NAICS production. Software publishing goes here because creating and marketing a copyrighted product is the creative process for other types of intellectual products. "The creation of this sector will allow the U.S. government and business (and other governments and businesses) to track the tremendous impact of information-based industries on the U.S., Canadian, and Mexican countries.