BUS501: Strategic Management

The U.S. ECPC established by OMB in 1992 was chaired by the Bureau of Economic Analysis, U.S. Department of Commerce, with representatives from the Bureau of the Census, U.S. Department of Commerce, and the Bureau of Labor Statistics, U.S. Department of Labor. The ECPC was asked to examine economic classifications for statistical purposes and to determine the desirability of developing a new industry classification system for the United States based on a single economic concept. On March 31, 1993, OMB published a Federal Register notice (58 FR 16990-17004) announcing the intention to revise the SIC for 1997, the establishment of the ECPC, and the process for revising the SIC.

In July 1994, OMB announced plans to develop a new industry classification system in cooperation with Mexico's INEGI and Statistics Canada. The new system – NAICS – replaced the U.S. SIC. The concepts of the new system and the principles upon which NAICS was to be developed were announced in a July 26, 1994, Federal Register notice (59 FR 38092-38096) and were 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 greatest extent possible. However, changes in the economy and proposals from data users must be considered. In addition, adjustments will be required for sectors where the United States, Canada, and Mexico 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 two-digit level of the International Standard Industrial Classification of All Economic Activities of the United Nations.
   

The structure of NAICS was developed in a series of meetings among the three countries. 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 the United States, public comments also were solicited as groups of subsectors of NAICS were completed and agreed upon by the three countries. The ECPC published the proposed industries for those subsectors in a series of five successive Federal Register notices, in 1995 and 1996, asking for comments from interested data users.