Q. - What is SIC?

The Standard Industrial Classification (SIC) system is a series of number codes that attempts to classify all business establishments by the types of products or services they make available. Establishments engaged in the same activity, whatever their size or type of ownership, are assigned the same SIC code. These definitions are important for standardization.

The SIC codes were developed to facilitate the collection, tabulation, and analysis of data and to promote comparability in statistical analyses. Despite drawbacks in the classifications, it is useful to have a code in hand when doing research. Most business directories and directory databases use the SIC codes to classify companies. The federal government uses the codes for particular data series; for example, the Census of Manufactures and the Census of Retail Trade.

Q. - What is NAICS?

Beginning in 1997, the SIC will be replaced by the North American Industry Classification System (NAICS).  This six digit code is a major revision that not only provides for newer industries, but also reorganizes the categories on a production/process-oriented basis (SIC used a mixture of production-based and market-based categories). 

The new NAICS system was developed jointly by the U.S. Census Bureau in cooperation with the U. S. Economic Classification Policy Committee, Statistics Canada and Mexico's Institutio Nacional de Estadistica, Geografia e Informatics. This new, uniform, industry-wide classification system has been designed as the index for statistical reporting of all economic activities of the U.S., Canada, and Mexico.

NAICS Summary

• Common code between U.S., Mexico, and Canada.
• Compatible with 2-digit level of ISIC of the United Nations.
• More industries and distinctions.
• Emerging high-tech industries and service industries included.
• New Information Industry.
• New 6-digit codes instead of 4-digit as in SIC.

The NAICS hierarchical structure is:

XX     Industry Sector (anticipating up to 20 industries)
XXX    Industry Subsector
XXXX   Industry Group
XXXXX  Industry
XXXXXX U.S.(Canadian, or Mexican) National Industry   

Q. - What is the difference between NAICS and the 1980 Canadian SIC?

The NAICS hierarchy and coding system differs from the Canadian 1980 SIC in certain important respects. The first four levels of NAICS are designed for the production of comparable economic statistics by the three countries. At the fifth level, each country elaborates the national detail it requires for statistical purposes. Thus in contrast to the 1980 SIC, the grouping of industries in the hierarchy of NAICS and their delineation at the fifth level are no indication of their statistical importance in the Canadian economy.

Q. - When will I start seeing NAICS used instead of SIC?

Your business will probably first see the effects of the North American Industry Classification System (NAICS) in mid-December 1997 when the forms for the 1997 Economic Census will be sent to all but the smallest businesses in the country.  These forms will require NAICS instead of SIC.

The United States will use NAICS beginning in 1997 for all Annual Surveys and the Census of Manufactures. Therefore, though the identifying numbers will change, the categories reported will remain the same and our statistical reporting will continue as before.

Q. - Why use NAICS and SIC?

Although the purpose behind the creation of the NAICS classification system is specifically for governmental regulations and census reports, this system can be implemented in any business to classify customers and enable users to gain a clear perspective on target markets. This is one of the most common uses of the NAICS and SIC in the general market.

For example, if your business sold equipment specific to dry cleaners it would be valuable to have a list of all the dry cleaners locally or nationally.  To do this, you would look up the NAICS code specific to dry cleaners in a NAICS database (such as the NAICS to SIC InfoBase), then using a business database (such as PhoneDisc) you would get a list of all companies based on that code.

Whether it's statistical analysis, market research, or sales leads NAICS and SIC codes provide a valuable tool to get the information needed to succeed.

Q. - Who uses NAICS and SIC?

The following are just a few examples of who:

• State and Federal agencies.
• Census Bureau, for economic census reports.
• Attorneys for filing required government documents.
• Mailing list publishers for classification.
• Banks for evaluating loan applications.
• Marketing agencies/departments for targeted marketing.
• Market researchers.
• Insurance companies for accessing risks.
• Job service agencies for assisting applicants seeking employment.
• City planning and zoning boards for monitoring compliance with zoning requirements.
• Environmental protection agencies for monitoring emissions.
• Power and utility companies for projecting usage needs.
• Publishers for soliciting advertisers based on classified readership.
• Trade associations.
• Business, for sorting non-statistical articles and reports on industry and products.
• Economists.
• Planners.
• Statisticians.
• Database producers for searching by industry.
• Many others.