Thursday, August 9, 2007

A Question of SIC and NAICS Codes

Question I see on a listserv: Been working with a group here this week. They're trying to update some data on some commercial loans and are asking me to verify SIC/NAICS for them. Come to find out that through D& you can get SIC's, but they are listing NAICS codes. Patron also wants NAICS codes, especially for the companies where D&B's code doesn't match what they already had internally.
Problem is some of these businesses are pretty small.... Any ideas on sources of NAICS codes for small companies. (Have already tried Ward's

So I write: You might try Reference USA, available in many public and state libraries, which lists both SIC and NAICS codes for the companies listed.
If the company's not in there, and you have the SIC, you could do the conversion using this site, though it'll be tricky because many of the conversions aren't one-to-one.
Hope this is useful.

And I think I'm done. No such luck:

Some folks have been kind enough to point out the government site where you can move from SIC to NAICS. Our problem is that we have a conflict between the SIC in the patron's internal system and the information we're getting from D&B. The folks in the office don't always know exactly what the company does, so it would be hard for them to determine it themselves.
They'd like a source to go straight to the NAICS.....

I reply: "They'd like a source to go straight to the NAICS....."

If I understand your statement correctly, it seems that you are looking for the "standard" NAICS code. But look at the link here, particularly questions 5 and 6. It's quite possible that - and I'm making the example up - that D&B will assign IBM the NAICS code for computer manufacturer, Hoover will select software manufacturer, and Reference USA something else.
Which one is right? Based on the way information is gathered, perhaps all of them.

If I were doing your project, I'd decide that the either the client list is correct or the D&B list is correct, then fill in the holes, because you're not likely to find the consistency you seek, in my experience.

I was happy to get some confirmation from another librarian:
I agree. I have not ever ended up using the NAICS codes as much as my Library school professor promised I would, but I learned exactly what you are saying, had it drilled into my head, and then experienced it in some practice too: that for both SIC or NAICS, or really any classification system, there is some arbitrariness(?), maybe even a great deal of it. Further, for some it is the directory that does the assigning of the classifications and for some it is the company itself that checks a box (for example) assigning them to themselves. So much room for variables. Never going to be perfect. Must do what you suggested and just dive in and start.

So, now here's MY question: when you're looking for a primary SIC/NAICS code for a business - and recognizing that some will have multiple codes - what do YOU use?

1 comment:

lmg18 said...

According the OMB NAICS (and SIC) Manuals, the industry is assigned on an ESTABLISHMENT not company basis. The basic rule is that the activity producing the greatest revenue/shipments/etc. for the establishment is used to determine the industry. This is because each establishment can be assigned to just one industry. Even so, there have been cases where different agencies have assigned the same establishment to different industries (this accounts for some of the differences between Census and DOL/BLS data).

Thus a company could easily have multiple industries. Thus any or all of the codes proposed for IBM could be correct.

Under the old SIC rules, auxiliary establishments were assigned to the primary industry of the establishments they served (major source of revenues of these establishments as a group). Thus, under the SIC system, GE Corporate Headquarters and Global R&D facilities would have been classified NOT in manufacturing, but in Finance, since credit activities were the major source of revenue for GE in the late 1990s. (Under the NAICS system, these are assigned to industries based on their own activities.)