Census Bureau rethinks laser classifications

The US Census Bureau (Washington, DC) is finally improving the way it presents statistical information, especially for advanced-technology categories including diodes and laser systems. The North American Industry Classification System (NAICS or "nakes") is replacing the existing Standard Industrial Classification (SIC) system, which has been in place since the 1930s. According to Ken Hansen, chief of the Manufactured Durables Branch at the Census Bureau, the payback in data accuracy and detail

Census Bureau rethinks laser classifications

Paula M. Noaker Senior Editor

The US Census Bureau (Washington, DC) is finally improving the way it presents statistical information, especially for advanced-technology categories including diodes and laser systems. The North American Industry Classification System (NAICS or "nakes") is replacing the existing Standard Industrial Classification (SIC) system, which has been in place since the 1930s. According to Ken Hansen, chief of the Manufactured Durables Branch at the Census Bureau, the payback in data accuracy and detail could be dramatic for companies that rely on market information from the US Department of Commerce to track both the domestic output of laser manufacturers and the trade of laser systems and related equipment between the USA, Canada, and Mexico.

One goal of NAICS is to standardize the industry coding systems of the three trading partners involved in the North American Free Trade Agreement (NAFTA). The move to NAICS also brings coding more in line with the European International Harmonized coding system. Equally important, according to Hansen and colleague Milbren Thomas, is the goal of resolving classification problems of the SIC system, such as an inability to keep up with new technologies and industries and incremental advances in others. Not only was the SIC based data limited for technologies such as laser systems from their inception, as new related technologies were developed their SIC codes varied dramatically--sometimes without apparent rhyme or reason (see table).

Making codes flexible

The Census Bureau needed a data-coding system that could collect effective statistics for a wide variety of new, emerging, and advanced-technology and service-based industries. To allow for such expansion, NAICS identifies industries and related product subcategories with a six-digit code, unlike SIC, which was based on a four-digit code. The larger code allows 1170 detailed US industry classifications, including 390 that were revised from their SIC counterparts and 422 that remain basically the same. It also includes 358 classifications for new industries that SIC did not recognize, for example, semiconductor-machinery manufacturing and fiberoptic-cable manufacturing.

With the six-digit code comes more flexibility in designating subsectors (see table). For example, NAICS sector-level codes 31-33 designate manufacturing. Adding a 4 to the end of 33 identifies subsector 334, which designates computer and electronic-product manufacturing. Industry group code 3346 defines the product further as related to manufacturing and reproduction of magnetic and optical media. The delineation would continue through the last two digits of the six-digit code for each product or service classified.

Unlike SIC, NAICS allows differentiating products according to characteristics that may be unique or shared by different industries. For example, the system takes into account the impact of design considerations on machinery production by allowing coding to reflect the fact that companies specialize in making machinery for particular applications. Both laser cutting machines and laser welding industries are involved in machinery manufacturing, which is illustrated by the first three digits of their NAICS codes (333 for machinery manufacturing). In the SIC system, they are coded 3541 and 3699, respectively, and this link is lost.

To ensure coding accuracy in laser-technology areas, the Laser and Electro-Optics Manufacturers` Association (Pacifica, CA) contacted the Census Bureau as soon as the proposed change was publicized and emphasized the need to improve laser classifications to more accurately reflect the industry. Census Bureau researchers also are working closely with industry groups such as the National Institute of Standards and Technology (Gaithersburg, MD), and Laser Focus World magazine.

The first glimpse of NAICS-based data will be early this year in the 1997 Economic Census Advance Report. Laser manufacturers interested in more-detailed information on the conversion to NAICS and how this will affect them should check out the Census Bureau website at www.census.gov. In addition, the Bureau`s July 1998 NAICS manual explains the coding system in depth. o

Bulk reprints of all Laser Focus World articles can be ordered from Cathleen Johnson, reprints manager, at (603) 891-9415 or FAX (603) 891-0574.

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