Economic
Classification
Policy
Committee
Report
No.
1
Economic
Concepts
Incorporated
in
the
Standard
Industrial
Classification
Industries
of
the
United
States
August
1994
Copies
of
this
and
other
Economic
Classification
Policy
Committee
reports
can
be
obtained
from
the
Economic
Classification
Policy
Committee,
Bureau
of
Economic
Analysis
(
BE­
42),
U.
S.
Department
of
Commerce,
Washington,
D.
C.
20230,
or
by
telephone
at
(
202)
606­
9615,
FAX
(
202)
606­
5311.
Economic
Classification
Policy
Committee
Report
No.
1
Economic
Concepts
Incorporated
in
the
Standard
Industrial
Classification
Industries
of
the
United
States
Introduction
In
1992,
the
U.
S.
Office
of
Management
and
Budget
(
OMB)
established
the
Economic
Classification
Policy
Committee
(
ECPC),
and
charged
it
with
conducting
a
"
fresh
slate"
examination
of
economic
classifications.
The
ECPC
was
explicitly
instructed
by
OMB
to
design
an
improved
conceptual
framework
for
a
new
industrial
classification
system
to
be
put
into
place
by
1997.

In
the
initial
part
of
its
investigation,
the
ECPC
published
ECPC
Issues
Paper
No.
1,
"
Conceptual
Issues."
1
ECPC
Issues
Paper
No.
1
develops
the
concept
of
the
production­
oriented,
or
supply­
based,
industry
classification.
It
also
links
the
production­
oriented
economic
concept
to
the
preparation
of
data
that
would
be
appropriate
for
analyses
of
production,
productivity,
input
intensities,
and
so
forth.
All
of
these
uses
share
the
requirement
that
the
data
be
constructed
according
to
the
production­
oriented
concept.

The
second
economic
concept,
the
market­
oriented
or
demand­
based
economic
classification
system,
is
also
developed
in
ECPC
Issues
Paper
No.
1.
The
paper
shows
that
the
market­
oriented
concept
results
in
data
that
are
appropriate
for
marketing
studies,
demand
studies,
market
share
studies,
and
related
analyses.
2
Emphasis
on
economic
concepts
is
a
relatively
new
approach
to
developing
economic
classifications.
The
ECPC's
focus
on
economic
concepts
is
responsive
to
views
expressed
by
many
of
the
participants
at
the
1991
International
Conference
on
Classification
on
Economic
Activities.
3
____________________

1
Economic
Classification
Policy
Committee,
Issues
Paper
No.
1,
"
Conceptual
Issues,"
Federal
Register,
March
31,
1993,
pp.
________________
16991­
17000.
2
ECPC
Issues
Paper
No.
1
asked
for
public
comment
on
the
appropriateness
of
these
two
alternative
frameworks
for
a
new
classification
system
for
the
United
States.
A
report,
"
Summary
of
Public
Comments
to
ECPC
Issues
Papers
Nos.
1
and
2,"
is
available
upon
request
from
the
ECPC.

3
Bureau
of
the
Census,
Proceedings,
International
___________
Conference
on
Classification
of
Economic
Activities,
Williamsburg,
Virginia:
U.
S.
Department
of
Commerce,
November
More
fundamentally,
the
ECPC's
emphasis
on
economic
concepts
for
economic
classifications
is,
equivalently,
an
emphasis
on
the
uses
of
industrial
data,
particularly
the
uses
of
such
data
in
economic
analysis.
When
data
uses
are
emphasized
to
develop
economic
classifications,
the
first
step
is
an
explicit
analysis
of
the
major
uses
of
data
that
are
based
on
economic
classifications;
the
second
step
is
to
derive,
and
from
the
economic
framework
and
economic
concepts
that
underlie
the
uses
of
data,
implications
for
the
design
of
economic
classification
systems.
Tying
the
design
of
economic
classifications
explicitly
to
the
economic
uses
of
classified
data
is
the
major
innovation
introduced
by
the
ECPC,
compared
with
past
work
in
classifications.

The
ECPC
determined
early
in
its
review
process
that
it
was
essential
to
understand
the
underlying
concepts
embedded
in
the
existing
U.
S.
Standard
Industrial
Classification
(
SIC)
system,
before
recommendations
could
be
made
on
developing
a
new
system.
The
present
U.
S.
SIC
system
originated
over
50
years
ago
and
has
been
revised
many
times,
most
recently
in
1987.
Little
documentation
now
exists
on
how
the
SIC
system
was
developed
and
on
its
revisions
since
its
inception.
For
example,
no
written
documentation
was
produced
on
the
1987
SIC
revision,
though
some
internal
files
exist
for
earlier
SIC
revisions.
The
bases
for
decisions
that
led
to
the
current
U.
S.
system
have
been
lost
in
time.

Many
different
views
about
the
structure
of
the
present
U.
S.
SIC
system
have
been
expressed.
Not
surprisingly,
many
of
the
criticisms
that
have
been
made
of
the
U.
S.
SIC
system
reflect
these
different
views
about
the
structure
of
the
system,
and
of
the
purposes
for
which
it
was
designed.
Moreover,
some
critics
have
in
mind
uses
for
industrial
data
that
differ
from,
and
are
not
always
fully
consistent
or
compatible
with,
the
uses
desired
by
others
who
have
criticized
the
system.

In
one
view,
the
U.
S.
SIC
system
embodies
primarily
production­
oriented
concepts,
and
(
depending
on
their
views
about
the
ideal
classification
system)
persons
who
hold
this
view
contend
that
the
production­
oriented
decisions
should
either
be
changed,
or
that
production­
oriented
decisions
should
be
implemented
more
consistently
throughout
the
system.
Others
with
a
different
view
of
the
system
feel
that
it
is
primarily
a
market­
oriented
system,
which
is
either
favored
or
not,
depending
on
the
view
of
the
speaker.
____________________

6­
8,
1991,
587
pages.
Available
from
Bureau
of
the
Census,
Room
2069­
3,
Washington,
D.
C.
20233.

Some
have
also
said
that
the
present
SIC
system
reflects
different
decisions,
depending
on
stage
of
process­­
that
is,
primary
goods
industries,
for
example,
have
been
treated
differently
in
past
SIC
decisions
from
finished
goods
industries.
Still
others
have
said
that
differing
concepts
have
been
incorporated
into
different
parts
of
the
SIC
system.
Differing
concepts
may
have
been
adopted
because
of
inherent
differences
in
the
structure
of
production
and
of
markets
across
different
sectors
of
the
U.
S.
economy,
or
because
trade
associations,
and
to
an
extent
corporate
structures,
vary
as
to
organizing
principle,
and
these
organizations
have
influenced
past
decisions
about
the
SIC
system.

Because
so
many
differing
views
have
been
expressed
about
the
present
U.
S.
SIC
system,
the
ECPC
initiated
a
study
to
ascertain
the
conceptual
basis
of
industries
in
the
system.
A
similar
study
of
the
Canadian
SIC
system
has
been
conducted
by
Statistics
Canada.
This
paper
explains
how
those
reviews
were
conducted
and
presents
the
results
for
the
United
States.
A
companion
paper4
presents
results
for
Canada.

I.
The
Idea
of
a
Concept­
based
Industry
As
described
in
ECPC
Issues
Paper
No.
1,
a
production­
oriented
or
supply­
based
industry
is
one
in
which
the
production
technology
of
the
industry­­
described
by
the
production
process
itself,
the
materials
sed,
the
type
of
labor
employed,
or
some
combination
of
these­­
uniquely
defines
the
industry.
That
is,
when
an
industry
is
defined
on
a
production­
oriented
concept,
the
producing
units
that
are
grouped
within
the
industry's
boundaries
share
a
basic
production
process,
they
use
closely
similar
technology.
Producing
units
in
no
other
industry
share
the
same
technology
and
production
process.
In
the
language
of
economics,
producing
units
within
an
industry
share
the
same
production
functions;
producing
units
in
different
industries
have
different
production
functions.
The
boundaries
between
industries
thus
demarcate,
in
principle,
differences
in
production
processes
and
production
technologies.

In
contrast,
a
market­
oriented
or
demand­
based
classification
is
one
in
which
either
the
products
form
a
unique
market,
or
the
products
are
used
and/
or
distributed
together.
If
the
grouping
is
a
"
market"
category,
then
the
products
included
in
it
are
closer
substitutes
among
themselves
than
are
any
products
outside
the
industry.
If
products
are
used
together
____________________

4
Young,
Kenneth,
"
The
Conceptual
Basis
of
the
Standard
Industrial
Classification,"
Standards
Division,
Statistics
Canada,
February
1994.

(
complements),
or
share
distributive
networks,
this
is
another
basis
for
a
demand­
based
classification.
5
Obviously,
both
conceptual
definitions
leave
a
great
deal
of
room
for
interpretation.
For
example,
a
market­
oriented
industry
might
be
defined
in
terms
of
the
cross
price
elasticities
of
demand
between
the
products
within
the
industry
versus
products
outside
the
industry
(
or
alternatively,
on
what
are
known
as
"
elasticities
of
substitution").
However,
comprehensive
empirical
information
on
substitution
among
commodities­­
from
marketing
studies
or
from
demand
studies,
for
example­­
was
not
available
for
the
ECPC
study.
In
the
absence
of
data
on
substitution,
markets
may
be
considered
more
broadly
or
more
narrowly.
Where,
for
example,
does
one
draw
the
boundaries
among
markets
for
different
kinds
of
beverages?
If
different
kinds
of
soft
drinks
are
close
substitutes,
are
not
soft
drinks
also
substitutes
for
juices?
for
milk?
for
beer?
The
working
group
carrying
out
the
ECPC
study
had
to
impose
its
judgment
about
what
seemed
reasonable
market
categories.

Similarly,
production
processes
may
be
considered
broadly
or
narrowly.
For
some
purposes,
welding
and
brazing
are
the
same
process;
for
others,
they
are
not.
Manufacture
of
parts
may
involve
quite
different
technology
from
assembly
of
the
parts
into
the
ultimate
product,
and
the
two
kinds
of
processes
may
or
may
not
occur
together
in
the
same
establishment.
In
many
cases,
the
production
process
that
leads
to
a
particular
product
may
in
fact
be
a
set
of
interrelated
but
distinct
processes
that
are
performed
together
in
the
same
establishment.
Moreover,
vertical
integration
of
these
interrelated
processes
may
be
present
in
some
establishments
and
not
in
others,
which
must
also
be
considered
in
the
judgments
incorporated
into
the
matrix.
Again,
provisional
judgments
on
production
processes
had
to
be
made
in
order
to
carry
out
the
study.

The
ECPC
wishes
to
emphasize
the
role
of
judgment
in
the
review
that
is
contained
in
this
report.
The
working
group's
results
were
inevitably
constrained
by
the
information
available
to
it,
so
its
findings
should
be
viewed
as
preliminary,
and
as
a
basis
for
further
discussion.
Comment
on
the
judgments
in
the
matrix,
from
industry
representatives
or
other
knowledgeable
persons,
is
solicited
and
welcomed.

ECPC
Report
No.
1
presents
to
the
public
more
information
about
the
production­
oriented
and
market­
oriented
concepts
____________________

5
ECPC
Issues
Paper
No.
1
also
discusses
Hicksian
aggregation
and
functional
aggregation
as
alternative
bases
for
market­
oriented
classifications.
For
lack
of
information,
no
attempt
was
made
to
judge
whether
industries
corresponded
these
standards
for
forming
demand­
based
industries.
described
in
ECPC
Issues
Paper
No.
1,
particularly
on
how
these
economic
concepts
can
be
used
in
pragmatic
ways
to
guide
the
process
of
determining
industry
classifications.
The
ECPC
has
requested
(
see
Federal
Register,
July
26,
1994)
that
proposals
for
new
or
modified
industries
be
based
on
implementing
the
production­
oriented
economic
concept.
The
information
in
the
matrix,
and
the
review
process
that
is
described
in
this
ECPC
report,
can
accordingly
provide
information
and
guidance
to
those
individuals
or
organizations
who
are
interested
in
proposing
new
4­
digit
industries
or
modifying
existing
ones.

II.
The
Matrix
A
working
group
reviewed
individual
U.
S.
4­
digit
industries
to
determine
if
a
conceptual
basis
for
each
industry
could
be
identified.
A
subset
of
the
1,004
U.
S.
4­
digit
industries
was
chosen
for
study.
The
4­
digit
industries
examined
included
all
those
in
the
following
SIC
major
groups.

Goods­
producing
major
groups
("
2­
digit
industries")
were
selected
to
include
capital,
consumer
and
intermediate
goods,
and
both
durables
and
nondurables:

Major
Group
20
Food
and
Kindred
Products
Major
Group
23
Apparel
and
Other
Finished
Products
Made
from
Fabrics
and
Similar
Materials
Major
Group
33
Primary
Metal
Industries
Major
Group
35
Industrial
and
Commercial
Machinery
and
Computer
Equipment
Major
Group
37
Transportation
Equipment
The
175
4­
digit
industries
in
the
above
2­
digit
major
groups
accounted
for
37
percent
of
the
459
industries
in
manufacturing,
and
43
percent
of
U.
S.
manufacturing
value
of
shipments
in
the
1987
Economic
Censuses
(
table
1).

The
working
group
also
studied
the
60
4­
digit
industries
in
the
following
Major
Groups
in
the
services
sectors:

Major
Group
72
Personal
Services
Major
Group
73
Business
Services
Major
Group
87
Engineering,
Accounting,
Research,
Management,
and
Related
Services
The
services
industries
selected
for
review
accounted
for
43
percent
of
services
industry
receipts,
the
same
proportion
as
the
manufacturing
industries
included
the
study.
The
services
industries
also
included
many
that
provided
rigorous
"
test
cases"
for
application
of
the
economic
concepts.
In
total,
the
working
group
reviewed
235
industries,
23
percent
of
the
1,004
U.
S.
SIC
4­
digit
industries.
These
industries
accounted
for
19
percent
of
U.
S.
total
value
of
shipments
or
receipts
in
1987.

At
the
beginning
of
its
work,
the
matrix
working
group
designed
a
questionnaire
that
helped
focus
the
discussion
for
each
industry.
A
copy
of
that
questionnaire
is
reproduced
as
Appendix
A.

Each
4­
digit
industry
was
discussed
at
length
among
the
members
of
the
working
group
until
a
consensus
was
reached
on
the
presence
or
absence
of
an
economic
concept
that
described
the
industry.
The
discussion
was
directed,
either
explicitly
or
implicitly,
by
the
questionnaire,
Appendix
A.
Answers
to
the
questions
on
the
questionnaire
dictate
the
corresponding
entries
in
Appendix
B,
according
to
the
rules
set
forth
in
the
instructions
on
the
questionnaire.

The
results
of
the
review
are
documented
in
the
"
Matrix
of
Economic
Concepts
in
Selected
U.
S.
SIC
Industries"
(
Appendix
B).
The
matrix
shows
the
extent
that
each
U.
S.
4­
digit
SIC
industry
corresponds
to
production­
oriented
or
market­
oriented
classification
concepts,
as
those
concepts
are
explained
in
ECPC
Issues
Paper
No.
1.

It
is
important
to
emphasize
again
the
judgment
involved
in
this
process.
Judgments
are
incorporated
into
the
matrix,
and
those
judgments
are
inherently
subjective.
None
of
the
working
group
members
qualified
as
an
authority
on
the
technology
and
production
processes
used
in
the
4­
digit
industries
that
were
studied,
nor
were
they
necessarily
marketing
experts.
Other
analysts
may
disagree
with
the
judgments
the
working
group
made,
or
have
access
to
better
information
than
was
available
to
them.

Individuals
from
within
the
industries
themselves,
individuals
who
have
carried
out
marketing
studies
on
products
produced
within
these
industries,
and
other
private
sector
and
government
industry
authorities
would
no
doubt
be
able
to
add
valuable
information
on
production
technologies
and
on
markets
for
all
of
the
industries
that
were
studied
by
the
working
group.

The
ECPC
welcomes
comments
from
informed
persons
on
thejudgments
incorporated
into
the
matrix.
Those
judgments
should
be
considered
as
the
basis
for
further
discussion,
for
refinement,
and
for
revision
when
more
expertise
on
particular
markets
and
production
processes
becomes
available,
either
from
industry
comments
or
from
elsewhere.
The
matrix
in
its
present
stage
can
thus
be
thought
of
as
a
preliminary
review
of
the
U.
S.
classification
system,
and
it
is
subject
to
revision
as
additional
information
is
received
from
industry
and
other
sources.
Forming
the
Matrix
from
the
Questionnaire
Reviewing
the
questionnaire
(
Appendix
A)
is
useful,
not
only
for
understanding
how
the
matrix
(
Appendix
B)
was
constructed,
but
also
to
explain
the
symbols
that
are
used
in
the
body
of
the
matrix.
Each
question
in
the
questionnaire
has
a
counterpart
column
in
the
matrix;
both
the
questions
in
the
questionnaire,
and
columns
in
the
matrix,
are
organized
into
production­
oriented
(
supply­
based)
and
market­
oriented
(
demand­
based)
blocks.

Consider
first
the
production­
oriented
questions
(
part
A
of
the
questionnaire).
The
first
question
under
part
A
asks
whether
there
is
a
common
production
process
that
is
shared
by
the
establishments
in
this
industry,
and
if
it
is
a
production
process
that
distinguishes
those
establishments
from
producers
in
other
industries.
An
affirmative
answer
means
that
the
production
process
defines
the
industry,
and
the
letter
"
D"
(
defines
a
conceptually
based
industry)
was
entered
in
the
matrix
under
the
column
labeled
"
process."
Thus,
taking
as
an
example
SIC
2021,
Creamery
Butter,
the
process
of
churning
to
make
butter
appears
unique
to
this
industry,
the
more
so
if
one
considers
the
fundamental
input
(
cream)
that
also
characterizes
this
industry.

As
implied
by
the
butter
example,
question
A.
2
asks
a
similar
question
about
the
material
or
materials
used
in
the
industry.
A
material
was
considered
to
define
an
industry
only
if
the
characteristics
of
the
material
imply
a
fundamental
partof
the
technology.
For
example,
the
physical
properties
of
cream
dictate
the
technology
used
to
separate
butter.
As
another
example,
the
physical
properties
of
fluid
milk
dictate
many
of
the
processing
methods
and
the
types
of
machinery
and
equipment
that
must
be
used
to
handle
it.

The
working
group
considered
material
as
a
way
of
isolating
aspects
of
the
technology
and
the
production
process
that
were
associated
with
a
particular
material,
aspects
that
might
not
otherwise
have
been
considered
fully
or
might
not
otherwise
have
been
understood
adequately
by
the
working
group
members.
An
industry's
mere
use
of
a
characteristic,
unique
or
major
material
is
not
sufficient
to
define
a
production­
oriented
industry.
For
example,
baking
chocolate
cakes
implies
the
use
of
chocolate,
which
is
not
an
ingredient
in
baking
white
cakes;
but
nothing
in
the
technology
of
cake
baking
differs
fundamentally
with
the
presence
or
absence
of
chocolate,
so
the
use
of
this
material
does
not
define
the
technology
of
an
industry.
As
another
example,
open­
pit
mining
of
different
ores
using
the
same
mining
technology
would
not
necessarily
be
placed
in
different
production­
oriented
industries;
one
would
have
to
consider
the
entirely
of
the
mining
process,
not
just
the
ore.

Though
it
was
central
in
many
services
industries,
the
labor
question,
A(
3),
did
not
define
the
technology
of
manufacturing
industries.
An
exception
is
SIC
3544,
Special
Dies
and
Tools,
Die
Sets,
Jigs
and
Fixtures,
and
Industrial
Molds,
where
highly
skilled
tool
and
die
makers
were
considered
an
important
element
in
defining
the
industry.
A
positive
answer
to
questions
A.
1
or
A.
2
led
to
the
judgment
that
the
industry
is
defined
on
a
production­
oriented
concept.
In
such
cases,
the
associated
symbol
"
D"
was
entered
in
the
appropriate
column
of
the
production­
oriented
side
of
the
matrix.

A
similar
process
was
used
for
the
market­
oriented
portion
of
the
questionnaire.
Using
once
again
the
example
of
SIC
2021,
Creamery
Butter,
the
working
group
determined
that
the
primary
products
produced
in
this
industry
(
butter,
of
different
types
and
in
different
packages)
are
better
substitutes
for
each
other
than
is
any
product
of
any
other
industry.
Thus,
butter
itself
is
a
reasonable
market
category
(
Appendix
A,
question
B(
1)).
This
answer
leads
to
the
symbol
"
D"
(
again
meaning
that
it
defines
a
conceptually
based
classification,
this
time
on
the
market­
oriented
side)
under
the
column
"
market"
in
the
matrix
(
Appendix
B,
fourth
column).
The
working
group
also
noted
that
a
broader
market
category
might
include
margarine
and
other
fats
and
oils,
which
underscores
the
judgment
that
must
be
made
in
constructing
the
matrix.

In
the
case
of
SIC
2021,
Creamery
Butter,
the
symbol
"
D"
appears
on
both
the
production­
oriented,
supply­
based
side
of
the
matrix
and
the
market­
oriented,
demand­
based
side
of
the
matrix.
This
means
that
data
for
the
butter
industry
are
appropriate
for
use
in
production­
related
analyses
and
also
in
demand
and
marketing
analyses.
Accordingly,
creamery
butter
is
designated
an
"
ideal"
industry,
and
is
so
coded
under
the
"
ideal
industry"
column
of
the
matrix.

The
working
group
considered
the
possibility
that
the
establishments
in
an
industry
might
share
a
common
production
process
among
them,
yet
the
same
or
a
closely­
similar
production
process
might
be
used
in
other
industries
as
well
(
Appendix
A,
question
A(
1)(
a)).
In
such
cases,
the
industry
would
include
only
part
of
a
production
process,
and
the
symbol
"
P"
(
for
partial
process)
was
entered
in
the
appropriate
column
in
the
production­
oriented
side
of
the
matrix.
For
example,
a
similar
processing
and
freezing
technology
is
used
by
the
establishments
in
SIC
2037,
Frozen
Fruits,
Fruit
Juices,
and
Vegetables,
but
it
is
by
no
means
a
unique
process
for
this
industry;
in
Canada,
frozen
fish
are
produced
in
the
frozen
fruit
and
vegetable
freezing
establishments
using
the
same
process.
In
the
matrix,
the
symbol
"
P"
(
for
"
part")
appears
under
process
for
industry
2037,
because
the
industry
as
now
defined
appears
to
include
only
part
of
an
industry
defined
on
a
production­
oriented
concept.

Where
the
symbol
"
P"
appears
on
the
production­
oriented
side
of
the
matrix,
this
implies
that
a
better
production­
oriented
industry
could
be
constructed
by
combining
this
industry
with
some
other
industry
or
industries,
or
parts
of
them.
The
candidate
industries
for
combination
are
listed
in
the
"
Comments."

The
opposite
case
is
where
one
present
SIC
4­
digit
industry
encompasses
more
than
one
production
process
(
Appendix
A,
question
A(
1)(
b)).
For
these
cases,
the
matrix
symbol
"
M"
(
for
multiple
process)
is
used.
For
example,
SIC
2034,
Dried
and
Dehydrated
Fruits,
Vegetables,
and
Soup
Mixes,
consists
of
two
production
processes:
One
set
of
establishments
uses
dehydration
technology;
another
set
of
establishments
mixes
dehydrated
ingredients
into
soup
mixes.
The
working
group
commented
that
separating
soup
mixes
from
the
dehydrated
fruit
and
vegetables
portion
of
the
industry
would
create
a
better
production­
oriented
industry
(
in
this
case,
they
also
judged
that
it
would
improve
the
grouping
as
a
marketing
category).

On
the
market­
oriented
side,
similar
definitions
of
"
P"
and
"
M"
symbols
were
used.
For
example,
all
of
the
products
produced
in
an
industry
might
belong
to
the
same
market,
but
products
from
some
other
industry
might
also
belong
in
this
market
(
Appendix
A,
question
B(
1)(
a)).
These
cases
are
treated
in
parallel
with
the
partial
process
industries:
The
symbol
"
P"
(
for
part
market)
is
entered
in
the
appropriate
column
or
columns
of
the
market­
oriented
side
of
the
matrix.
If
multiple
markets
exist
within
an
industry
(
Appendix
A,
question
B(
1)(
b)),
an
"
M"
is
entered
in
the
appropriate
column
of
the
matrix,
Appendix
B.

The
final
column
in
the
matrix
records
cases
where
the
working
group
gave
a
negative
answer
to
every
question
on
the
questionnaire.
For
example,
SIC
2023,
Dry,
Condensed,
and
Evaporated
Dairy
Products,
combines
neither
common
production
processes
nor
does
it
correspond
to
a
marketing
category,
so
far
as
the
working
group's
judgment
could
discern.
For
this
reason,
the
symbol
"
N,"
for
"
No
conceptual
basis,"
was
entered
in
the
far
right­
hand
column
of
the
matrix.
Most
of
the
SIC
system's
"
99"
or
"
not
elsewhere
classified"
(
nec)
industries
lack
any
economic
concept
by
definition,
and
were
recorded
"
N"
in
the
matrix.
All
these
industries
are
candidates
for
restructuring.

Industry
Examples
from
the
Matrix
It
is
instructive
to
go
through
a
few
additional
examples
to
understand
the
reasoning
that
went
into
the
matrix.

Consider
first
industry
2096,
Potato
Chips,
Corn
Chips,
and
Similar
Snacks.
Following
the
questionnaire,
there
does
seem
to
be
a
common
process
in
the
industry­­
frying,
or
oil
cooking.
Frying
would
define
the
technology
used
in
this
industry,
except
that
it
occurs
in
other
food
industries
also.
Thus,
the
working
group
entered
"
P"
in
the
process
column.

On
the
demand
side,
using
judgment
the
working
group
decided
that
SIC
2096
is
a
reasonable
market
category.
If
it
were
building
a
market­
oriented
system
from
scratch,
the
group
might
also
include
pretzels
and
nuts
in
the
snack
foods
market
category.

Another
market­
based
food
industry
is
Natural,
Processed,
and
Imitation
Cheese
(
SIC
2022).
One
might
think
that
cheese­
making
would
be
a
process­
based
industry,
and
so
it
would.
However,
SIC
2022
contains
imitation
cheese,
cheese
"
analogs,"
cheese
dips,
and
so
forth,
which
do
not
share
similar
production
processes,
or
even
similar
materials.
SIC
2022
is
thus
classified
only
as
a
market
category.
An
interesting
interaction
between
production­
oriented
and
market­
oriented
categories
arises
in
the
two
candy
industries
(
2064
and
2066).
Establishments
in
the
candy
industry
itself
(
SIC
2064,
Candy
and
Other
Confectionery
Products)
do
not
appear
to
share
any
common
production
process.
Instead,
candy
seems
to
be
a
market
grouping.
It
is,
however,
not
a
complete
market.
Although
chocolate
bars
made
by
producers
that
do
not
grind
and
process
the
cocoa
beans
are
in
the
candy
industry
(
SIC
2064),
chocolate
bars
made
by
fully
integrated
chocolate
makers
are
in
another
industry,
SIC
2066,
Chocolate
and
Cocoa
Products.
The
chocolate
industry,
SIC
2066,
seems
to
be
defined
primarily
on
the
production
process
of
grinding
and
processing
cocoa
beans:
That
is,
SIC
2066
is
primarily
a
production­
oriented
industry.
Many
of
the
resulting
products
are
not
close
substitutes
(
baking
chocolate
for
example),
and
therefore
do
not
make
up
a
single
market
category.
Because
the
candy
industry,
SIC
2064,
includes
some
chocolate
bars,
but
not
others,
it
is
only
a
partial
market
category;
its
related
industry,
the
chocolate
industry,
SIC
2066,
has
some
attributes
of
a
production­
oriented
industry.

Another
example
is
SIC
3562,
Ball
and
Roller
Bearings.
The
bearing­
making
process
was
judged
unique,
so
"
D"
was
entered
under
process.
On
the
market
side,
the
products
also
form
a
unique
market,
although
a
more
complete
market
also
would
include
plain
bearings,
which
are
close
substitutes
in
some
applications.
Since
the
industry
is
uniquely
defined
on
both
the
supply
and
demand
sides,
it
meets
the
criteria
for
an
"
ideal"
industry,
and
has
been
denoted
as
such.

Note,
as
the
bearing
industry
example
shows,
that
the
designation
"
ideal"
indicates
only
that
data
for
the
industry
as
presently
defined
can
be
used
both
for
production
analyses
and
for
market
analyses.
It
does
not
indicate
that
some
refinement
or
revision
of
the
present
industry
definition
would
or
would
not
make
the
industry
even
better
for
one
or
more
of
the
intended
data
uses.

Another
manufacturing
example
is
SIC
3563,
Air
and
Gas
Compressors.
This
industry
is
titled
incorrectly:
It
actually
consists
of
"
air
and
gas
compressors,
and
spraying,
dusting,
and
painting
equipment."
Correctly
titled,
it
neither
combines
establishments
employing
a
unique
process
(
or
labor
type,
or
material)
nor
does
it
comprise
a
unique
market.
Compressors
are
often
used
with
spraying
and
painting
equipment,
but
the
products
that
are
included
in
this
industry
cannot
be
viewed
as
complements
either.
The
industry
thus
appears
to
have
neither
a
production
nor
a
market
basis,
and
was
coded
"
N,"
which
signifies
the
belief
of
the
working
group
that
the
industry
as
now
defined
corresponds
to
no
conceptual
basis.

Clothing
industries
were,
in
general,
problems.
It
is
difficult
to
see
that
the
production
process
for
Men's
and
Boys'
Suits,
Coats,
and
Overcoats
(
SIC
2311)
is
significantly
different
from
the
production
process
for
Women's,
Misses,'
and
Juniors'
Suits,
Skirts,
and
Coats
(
SIC
2337),
or
from
that
for
Men's
and
Boys'
Separate
Trousers
and
Slacks
(
SIC
2325).
Moreover,
these
industries
all
include
several
levels
of
integration:
Integrated
manufacturers
that
purchase
materials
and
"
cut
and
sew"
the
garment;
contractors
that
do
not
own
the
material,
but
only
manufacture
the
garment
for
another
entity;
and
jobbers
that
own
the
material
and
perhaps
style
the
garment,
but
contract
out
for
the
garment's
manufacture.
The
actual
processes
involved
in
nearly
all
the
4­
digit
industries
in
Major
Group
23
are
the
same
in
each
industry,
namely:
design
the
garment,
purchase
the
material,
cut
the
material,
and
sew
the
garment.
It
also
is
difficult
to
see
why
a
clothing
establishment
that
makes
men's
coats
(
or
a
cut­
and­
sew
shop
that
cuts
and
sews
men's
coats)
could
not,
in
principle,
do
the
same
operation
on
women's
coats.

For
this
reason,
the
working
group
entered
"
P"
under
process
for
all
the
4­
digit
clothing
industries,
indicating
that
there
seems
little
basis
from
the
production­
oriented
concept
for
the
dividing
lines
that
are
drawn
in
the
present
SIC
4­
digit
clothing
industries.

Clothing
industry
establishments
do,
however,
seem
to
specialize
in
either
men's,
women's
or
children's
clothing,
or
at
least
that
was
true
in
the
past.
The
clothing
industries
appear
to
represent
marketing
categories,
or
categories
that
are
defined
by
the
distribution
practices
in
the
industry.
Establishments
apparently
specialize
to
produce
apparel
products
according
to
marketing
conventions.
The
working
group
coded
almost
all
of
the
clothing
industries
as
partial
market
categories.

The
working
group
did
not
feel
very
confident
in
any
of
its
judgments
with
respect
to
apparel
industries.
Notice
that
there
are
a
fair
number
of
N
industries
in
the
clothing
and
textiles
section,
industries
that
seem
to
lack
a
conceptual
foundation,
at
least
to
the
extent
of
the
working
group's
knowledge
of
them.
Particular
examples
are
the
"
Schiffli
Machine
Embroideries"
industry,
SIC
2397,
and
the
"
Pleating,
Decorative
and
Novelty
Stitching,
and
Tucking
for
the
Trade"
industry,
SIC
2395.
The
ECPC
will
obtain
additional
information
from
industry
and
trade
groups
regarding
the
economic
concepts
for
apparel
industries,
and
will
as
well
consider
information
on
the
classification
of
apparel
from
Canada
and
Mexico.

Primary
metals
provide
many
examples
of
production­
oriented
industries.
However,
a
large
number
of
the
primary
metals
industries
either
incorporate
multiple
processes
within
them
coded
"
M"
under
process)
or
share
processes
across
several
current
SIC
industries
(
coded
"
P").
For
example,
aluminum,
copper,
and
other
nonferrous
foundries,
SIC
3365,
3366,
and
3369,
respectively,
do
not
seem
to
be
separated
by
production
process,
but
by
input
material
only.
Unless
the
input
metals
have
implications
for
the
foundry
processes
that
must
be
employed
on
them,
these
three
seem
partial
process
industries,
and
might
be
combined
into
a
wider
production­
oriented
industry.

Services
Industry
Examples
Information
on
services
industries
is
less
abundant,
and
the
services
classifications
themselves
are
less
well
developed
than
is
true
in
manufacturing.
For
this
reason,
even
more
judgment
was
required
to
determine
the
conceptual
basis
for
services
industries.

In
services,
it
was
anticipated
(
see
ECPC
Issues
Paper
No.
6,
"
Services
Classifications")
that
specialized
labor
inputs
would
be
a
major
factor
in
assessing
industries
on
the
production
side.
Many
services
industries
sell
the
capabilities
of
their
employees,
and
though
employee
contributions
to
the
quality
of
the
product
are
also
vital
to
goods
production,
employee
skills
are
essential
aspects
of
what
services
producers
do.
Thus,
in
services
industries,
the
questionnaire's
labor
question
(
Appendix
A,
question
A(
3))
was
particularly
important.

One
example
is
SIC
7323,
Credit
Reporting
Services.
The
production
process
in
this
industry
involves
information
collection
and
processing;
one
could
argue
that
many
other
services
industries
also
conduct
information
processing
activities.
The
working
group
decided
that
the
personnel
performing
similar
tasks
at
banks
and
financial
institutions
and
at
mortgage
firms
likely
use
similar
skills,
and
that
the
on­
line
information
retrieval
process
in
SIC
7323
was
shared
with
SIC
7375,
Information
Retrieval
Services.
This,
the
working
group
decided,
warranted
a
"
P"
under
process.
On
the
demand
side,
the
working
group
decided
that
the
credit
reporting
service
industry
is
a
unique
market,
and
a
"
D"
was
entered
in
the
market
column
for
SIC
7323.
It
is
probably
true
that
financial
institutions
provide
similar
services,
but
they
do
so
mainly
for
themselves.

A
number
of
"
ideal"
industries
were
identified
among
the
services
industries
examined.
For
example,
SIC
8712,
Architectural
Services,
requires
unique
skills.
Many
years
of
schooling
and
training
are
required
before
one
is
licensed
as
an
architect,
and
these
skills
define
what
an
architectural
firm
sells.
This
influenced
the
group
to
code
this
industry
"
D"
under
the
labor
column
on
the
production­
oriented
side.
On
the
demand
side,
the
whole
range
of
services
offered
by
an
architectural
firm
is
unique
and
not
readily
substitutable
from
other
industries
(
though
substitution
may
occur
for
some
of
the
individual
services).
Thus,
a
"
D"
was
placed
in
the
market
column
of
the
matrix.
With
D's
on
both
sides
of
the
matrix,
SIC
8712
qualifies
as
an
ideal
industry.
Note
that
coding
SIC
8712
as
ideal
does
not
preclude
subdividing
this
industry,
on
the
basis
of
additional
information
on
architectural
services
and
their
markets,
into
components
that
might
also
be
ideal.

III.
Results
of
the
Review
Information
from
the
1987
Census
of
Manufactures
permits
tabulating
the
relative
importance
of
industries
that
have
been
placed
in
the
different
categories
of
the
matrix.

Table
1
presents
the
proportion
of
U.
S.
industries
that
were
selected
for
analysis
in
the
matrix,
and
the
proportion
of
total
U.
S.
value
of
shipments
accounted
for
by
these
industries.
Considering
just
the
manufacturing
and
services
industries
divisions
from
which
matrix
industries
were
drawn,
matrix
manufacturing
industries
accounted
for
$
1.06
trillion
of
shipments,
43
percent
of
manufacturing
shipments
of
$
2.48
trillion.
Matrix
services
industries
had
1987
receipts
of
$
329
billion,
43
percent
of
the
$
772
billion
of
receipts
for
the
service
industries.
Overall,
the
235
industries
reviewed
in
the
matrix
accounted
for
19.3
percent
of
total
1987
industry
value
of
shipments
or
receipts.

Manufacturing
Industries
Table
2
presents
the
results
for
manufacturing
industries.
It
suggests
hat
the
current
U.
S.
SIC
has
no
single
dominating
economic
concept.
In
the
following,
all
percentages
relate
to
the
totals
for
the
manufacturing
major
groups
included
in
the
study.
They
might
change
somewhat
if
all
the
459
manufacturing
industries
were
included.

Only
16.6
percent
of
the
industries
(
accounting
for
18.8
percent
of
value
of
shipments
for
the
manufacturing
industries
included
in
the
study)
are
fully
defined
on
a
production­
oriented
concept.
Roughly
half
of
these
are
ideal
industries,
that
is,
cases
where
the
same
industry
definition
would
emerge
from
application
of
either
the
production­
oriented
or
the
market­
oriented
economic
concept.

A
fifth
(
20
percent)
of
manufacturing
industries
are
partial
production­
oriented
industries
(
P).
As
noted,
these
are
cases
where
combination
with
some
other
industry,
or
parts
of
another
industry,
might
create
a
better
production­
oriented
industry.

Another
fifth
(
21.1
percent)
of
manufacturing
industries
encompass
multiple
production
processes
(
M)
within
the
same
SIC
industry
definition.
Multiple­
process
industries,
however,
account
for
a
third
of
manufacturing
shipments,
so
they
are
among
the
relatively
larger
industries
in
economic
importance.
Multiple­
process
industries
could
be
made
into
fully­
defined
production­
oriented
industries
with
relatively
simple
divisions
of
the
presently­
defined
industries.

Over
all,
roughly
three­
fifths
(
58.3
percent)
of
manufacturing
industries
incorporate
the
production­
oriented
concept
in
some
way
(
whether
"
D,"
"
M,"
or
"
P").
Two­
fifths
(
41.7
percent)
of
manufacturing
4­
digit
industries,
accounting
for
more
than
a
third
of
manufacturing
shipments,
have
no
production­
oriented
basis
in
the
current
SIC
classification
system.
A
number
of
these
are
"
nec"
industries,
which
are
appropriate
subjects
for
review
and
redefinition.

The
situation
is
not
much
different
with
respect
to
the
market­
oriented
concept.
A
somewhat
larger
number
of
present
4­
digit
manufacturing
SIC's
are
fully
defined
according
to
the
market­
oriented
concept
(
27.4
percent).
Another
quarter
of
manufacturing
industries
(
26.9
percent)
are
partial
markets,
accounting
for
about
the
same
share
of
manufacturing
shipments
as
the
fully­
defined
market
industries
(
20.2
and
23.2
percent
of
shipments,
respectively).
A
bit
more
than
two­
thirds
of
manufacturing
industries
(
69.1
percent)
incorporate
the
market­
oriented
concept
in
their
definitions
in
some
way
("
D,"
"
M,"
or
"
P").

By
shipments
shares,
10
percent
of
manufacturing
shipments
arise
from
ideal
industries
in
the
groups
of
the
present
SIC
system
that
were
examined
for
the
study.
This
is
more
than
equalled
by
the
17.1
percent
of
shipments
that
come
from
industries
with
no
conceptual
basis.

The
percentages
discussed
in
this
section
and
displayed
in
Table
2
pertain
only
to
the
manufacturing
major
groups
chosen
for
the
review.
Manufacturing
groups
that
have
not
yet
been
reviewed
account
for
more
than
half
of
manufacturing,
so
the
picture
might
change
when
a
full
review
of
all
459
manufacturing
industries
is
carried
out.

Manufacturing
2­
digit
Major
Groups
Tables
3
and
4
expand
on
the
information
in
Table
2
by
presenting
similar
tabulations
for
those
2­
digit
major
groups
in
manufacturing
that
were
selected
for
review.
Table
3
tabulates
the
percentages
of
4­
digit
industries
within
each
2­
digit
major
group,
and
corresponds
to
the
percentages
presented
for
manufacturing
as
a
whole
in
the
left­
hand
portion
of
Table
2;
Table
4
tabulates
the
same
information,
weighted
by
value
of
shipments,
and
so
corresponds
to
the
percentages
tabulated
for
manufacturing
as
a
whole
in
the
right­
hand
portion
of
Table
2.

In
these
tables,
the
food
industries
(
SIC
20)
and
the
primary
metal
industries
(
SIC
33)
have
the
largest
percentages
of
fully­
defined
production­
oriented
4­
digit
industries.
If
one
adds
in
the
large
proportion
(
76
percent,
by
value
of
shipments)
of
multiple­
process
primary
metal
industries
in
SIC
33,
this
SIC
major
group
appears
already
largely
to
conform
to
the
production­
oriented
classification
concept.

A
large
proportion
of
apparel
industries
(
SIC
23)
were
coded
partial
process,
for
reasons
noted
in
section
II,
above.
Machinery
industries
(
SIC
35)
seem
to
have
been
defined
most
often
by
market­
oriented
concepts,
where
they
fit
an
economic
concept
at
all.
Few
machinery
industries
have
been
defined
to
be
consistent
with
the
production­
oriented
economic
concept
(
over
70
percent
of
these
industries
were
judged
to
have
no
production­
oriented
basis).

Transportation
equipment
(
SIC
37)
4­
digit
industries
include
a
large
proportion
that
have
multiple
processes
(
56
percent
by
value
of
shipments)
and
multiple
markets
(
68
percent,
by
value
of
shipments,
counting
those
cases
where
an
industry
has
simultaneously
partial
market
and
multiple
markets
in
the
same
SIC).
Multiple
process
industries
are
possible
candidates
for
division
to
make
smaller
industries
that
more
closely
conform
to
the
production­
oriented
concept.

Stage
of
Process
Some
have
expressed
the
view
that
the
concepts
implemented
in
the
U.
S.
SIC
differ
by
Stage
of
Process
(
SOP).
On
this
view,
industries
that
are
in
lower
SOP's
(
crude
and
primary
materials
producing)
are
more
likely
to
be
production
oriented.
Final
products
industries
may
be
market
oriented.

Tables
5
and
6
contain
computations
that
are
similar
to
those
presented
in
earlier
tables,
but
they
are
arranged
according
to
the
Bureau
of
Labor
Statistics
SOP
for
each
4­
digit
industry
(
where
available).
The
SOP
classification
groups
industries
into
Crude,
Primary,
Semifinished,
and
Finished
categories,
based
on
the
input­
output
tables
published
by
the
Bureau
of
Economic
Analysis.
Producers
that
ship
75
percent
or
more
of
their
output
to
final
demand
are
designated
as
Finished
processors.
Producers
that
ship
60
percent
or
more
of
their
output
to
finished
producers
and
final
demand,
but
less
than
75
percent
to
final
demand,
make
up
the
Semifinished
processors
category.
Producers
shipping
60
percent
or
more
of
their
output
to
semifinished
or
finished
producers,
but
less
than
75
percent
to
final
demand
are
Primary
processors.
Crude
producers
are
the
industries
left
over
after
the
other
stages
were
defined.
6
As
the
tables
show,
the
evidence
suggests
a
weak
relation.
The
proportion
of
fully­
defined
production­
oriented
industries
is
indeed
highest
at
the
crude
stage
(
30
percent)
and
lowest
at
the
final
goods
stage
(
12
percent),
and
multiple­
process
industries
show
a
similar
pattern.
But
the
differences
in
percentages
among
the
various
stages
of
process
are
not
large,
and
nearly
as
many
crude
processing
industries
as
final
demand
industries
have
no
production­
oriented
basis.

Similar
statements
can
be
made
on
the
market­
oriented
side.
Somewhat
more
final
goods
industries
(
36
percent)
than
crude
processing
industries
(
20
percent)
are
fully­
defined
by
the
market­
oriented
concept.
The
differences
in
percentages,
however,
are
not
large,
and
they
do
not
increase
progressively
from
lower
to
higher
SOP.

Tables
5
and
6
show
that
the
expected
SOP
patterns
do
not
hold,
even
if
the
definition
of
production
or
market
orientation
is
extended
to
include
partial
industries
or
partial
markets.
Of
course,
the
sample
of
industries
included
in
the
matrix
is
incomplete.
Further
review
of
other
SIC
major
groups
will
provide
additional
evidence
on
the
relation,
if
any,
between
SOP
and
the
economic
concepts
of
SIC
4­
digit
industries.

Services
Industries
Table
7
presents
results
for
the
services
industries.
As
with
manufacturing,
the
analysis
of
services
industries
suggests
that
the
current
U.
S.
SIC
has
no
single
dominating
economic
concept.

____________________

6
Gaddie,
R.,
Zoller,
M.,
"
New
Stage
of
Process
Price
System
Developed
for
the
Producer
Price
Index,"
Monthly
Labor
Review,
April
1988,
pp.
3­
16.
Services
have
a
higher
percentage
of
fully­
defined
industries,
21.7
percent
for
production­
oriented
and
30.0
percent
for
market­
oriented
industries,
than
manufacturing
has.
For
services
industries,
26.7
percent
were
categorized
as
containing
multiple
production
processes,
which
may
indicate
that
these
processes
could
be
the
basis
for
artitioning
services
activities
into
a
larger
number
of
fully­
defined
production­
oriented
industries.
Only
13.3
percent
(
9.0
percent
by
value
of
receipts)
were
partial
process.
On
balance,
therefore,
the
groups'
judgment
suggests
a
greater
need
for
splitting
existing
services
industries
than
for
combining
them.

Roughly
the
same
proportion
of
services
industries
show
some
market­
oriented
basis
(
75.0
percent)
as
show
some
production­
oriented
basis
(
73.3
percent).
However,
the
high
percentage
of
services
industries
categorized
as
having
partial
markets
(
31.7
percent)
or
no
market­
oriented
basis
(
25.0
percent),
implies
that
many
services
industries
in
the
present
SIC
do
not
correspond
to
well­
defined
market
groupings.

Turning
to
the
results
by
2­
digit
services
major
groups
tables
8
and
9),
we
find
that
the
largest
percentage­­
62
percent­­
of
poorly
defined
groupings
occur
in
Major
Group
87,
Engineering,
Accounting,
Research,
Management,
and
Related
Services,
representing
about
39
percent
of
the
total
value
of
receipts
for
Major
Group
87.
Major
Group
87
is
equally
poorly
defined
with
respect
to
the
market
concept;
perhaps
its
very
title,
which
suggests
an
amalgam
of
professional
services,
provides
a
clue
to
the
source
of
the
problem.

The
largest
percentage
of
fully
defined
industries,
for
both
concepts,
is
found
in
Major
Group
73,
Business
Services.
Here
31
percent
of
industries
representing
20
percent
of
value
of
receipts
were
judged
fully
defined
on
a
production
basis,
and
38
percent
of
industries
representing
18
percent
of
value
of
receipts
were
judged
fully
defined
on
a
market
basis.
Including
those
industries
that
are
partially
defined
on
the
production
concept
raises
the
percentage
of
production­
defined
industries
to
50
percent,
representing
36
percent
of
the
value
of
receipts
for
the
major
group.
Fully
defined
and
partial
market
industries
sum
to
79
percent
of
the
industries
in
the
major
group,
representing
59
percent
of
the
value
of
receipts.

Major
Group
72,
Personal
Services,
is
the
only
services
major
group
containing
no
ideal
industries.
The
reason
seems
to
lie
in
the
collection
of
establishments
contained
therein:
These
are
laundries,
photographic
studios,
barber
shops,
shoe
repair
shops,
funeral
services,
tax
preparation,
and
other
miscellaneous
services.

(
TABLES
1­
9
can
be
viewed
at
http://
www.
census.
gov/
epcd/
naics/
ecpcrpt1)
APPENDIX
A
QUESTIONNAIRE
A.
Production­
oriented
or
Supply­
based
questions
1)
Does
the
production
process
uniquely
define
this
industry?

IF
YES,
ENTER
D
IN
COLUMN
2.

IF
NO:
a)
Is
the
process
used
in
other
industries?
IF
THE
INCLUSION
OF
THESE
OTHER
INDUSTRIES,
OR
PARTS
OF
THEM,
WOULD
CHANGE
YOUR
ANSWER
TO
(
1),
ENTER
P
IN
COLUMN
2
AND
ENTER
THE
OTHER
INDUSTRIES
IN
THE
NOTES.

(
b)
Are
there
two
distinct
processes
in
this
industry?

IF
SPLITTING
THIS
INDUSTRY
INTO
2
OR
MORE
PARTS
WOULD
CHANGE
YOUR
ANSWER
TO
QUESTION
(
1),
ENTER
M
IN
COLUMN
2,
AND
INDICATE
IN
THE
NOTES
WHAT
THE
DIVIDED
INDUSTRIES
MIGHT
BE
CALLED.

(
2)
Do
the
materials
used
in
this
industry
uniquely
define
the
industry?

IF
YES,
ENTER
D
IN
COLUMN
3.

IF
NO:

(
a)
Are
these
materials
used
in
other
industries?
IF
THE
INCLUSION
OF
THESE
OTHER
INDUSTRIES,
OR
PARTS
OF
THEM,
WOULD
CHANGE
YOUR
ANSWER
TO
(
2),
ENTER
P
IN
COLUMN
3
AND
ENTER
THE
OTHER
INDUSTRIES
IN
THE
NOTES.

(
b)
Are
there
two
distinct
materials
in
this
industry?
IF
SPLITTING
THIS
INDUSTRY
INTO
2
OR
MORE
PARTS
WOULD
CHANGE
YOUR
ANSWER
TO
QUESTION
(
2),
ENTER
M
IN
COLUMN
3,
AND
INDICATE
IN
THE
NOTES
WHAT
THE
DIVIDED
INDUSTRIES
MIGHT
BE
CALLED.

(
3)
Do
the
human
capital
components
of
the
labor
force
uniquely
define
this
industry?

IF
YES,
ENTER
D
IN
COLUMN
4.

IF
NO:

(
a)
Are
these
skills
used
in
other
industries?
IF
THE
INCLUSION
OF
THESE
OTHER
INDUSTRIES,
OR
PARTS
OF
THEM,
WOULD
CHANGE
YOUR
ANSWER
TO
(
3),
ENTER
P
IN
COLUMN
4
AND
ENTER
THE
OTHER
INDUSTRIES
IN
THE
NOTES.

b)
Are
there
two
distinct
labor
types
in
this
industry?

IF
SPLITTING
THIS
INDUSTRY
INTO
2
OR
MORE
PARTS
WOULD
CHANGE
YOUR
NSWER
TO
QUESTION(
3),
ENTER
M
IN
COLUMN
4,
AND
INDICATE
IN
THE
NOTES
WHAT
THE
DIVIDED
INDUSTRIES
MIGHT
BE
CALLED.

4)
Does
a
COMBINATION
of
material,
labor,
and/
or
process
uniquely
define
this
industry?

IF
YES,
THIS
IS
A
SUPPLY­
BASED
INDUSTRY.
ENTER
D
IN
APPROPRIATE
COLUMNS
(
COULD
BE
ANY
COMBINATION
OF
2,
3,
AND
4).

B.
Market­
oriented
or
Demand­
based
questions
(
1)
Are
the
products
of
this
industry
closer
substitutes
among
themselves
than
anything
produced
outside
the
industry?

IF
YES,
ENTER
D
IN
COLUMN
5.

IF
NO:

(
a)
Would
the
inclusion
of
another
industry
(
or
several,
or
part
of
another)
change
your
answer?

IF
YES,
ENTER
P
IN
COLUMN
5
AND
ENTER
THE
OTHER
INDUSTRIES
IN
THE
NOTES.

(
b)
Would
splitting
this
industry
into
two
change
your
answer?

IF
YES,
ENTER
M
IN
COLUMN
5
AND
INDICATE
IN
THE
NOTES
WHAT
THE
DIVIDED
INDUSTRIES
MIGHT
BE
CALLED.

(
2)
Are
the
products
of
this
industry
typically
distributed
or
used
together?

IF
YES,
ENTER
D
IN
COLUMN
6.
IF
NO:
(
a)
Would
the
inclusion
of
another
industry,
or
part
of
an
industry,
or
of
several
industries
or
parts
of
several
industries,
change
your
answer?

IF
YES,
ENTER
P
IN
COLUMN
6
AND
ENTER
THE
OTHER
INDUSTRIES
IN
THE
NOTES.

(
b)
Would
splitting
this
industry
into
two
or
more
industries
change
your
answer?

IF
YES,
ENTER
M
IN
COLUMN
6
AND
INDICATE
IN
THE
NOTES
WHAT
THE
DIVIDED
INDUSTRIES
MIGHT
BE
CALLED.
