A Short Guide to Understanding NAICS Codes

If you’re involved in manufacturing, then there is a good chance you have or will encounter NAICS Codes.  Several NFPA market reports organize and analyze data by NAICS codes, so a basic understanding of these unique series of numbers can be extremely helpful in interpreting the information contained in these reports and resources.

What are NAICS codes?
The North American Industry Classification System (NAICS) are the identifying numbers used by the federal government to classify companies by industry to collect, analyze, and publish statistical data related to the U.S. business economy.  Working with their counterparts from Mexico and Canada, the U.S. Economic Classification Policy Committee (ECPC) wanted to create common industry definitions for use across the three countries.  NAICS replaced the now-obsolete Standard Industrial Classification (SIC) system in 1997.

Why Use NAICS Codes?
NAICS Codes help provide uniformity and comparability in business establishment classification and statistical data presentation. Many statistical agencies, including most government agencies, use NAICS Codes to collect/organize statistical data and generate reports.  Such a widely used classification system makes market analysis and data resource identification much easier and more representative.

How Are NAICS Codes Structured?
The NAICS numbering system employs a six-digit code at the most detailed industry level. The first five digits are generally the same in all three countries. The first two digits designate the largest business sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industries, and the sixth digit designates the national industries.

For example, lawn and garden equipment manufacturing would be NAICS code 333112. Here is the breakdown:

33 stands for Manufacturing.
333 stands for Machinery Manufacturing.
3331 stands for Agriculture, Construction, and Mining Machinery Manufacturing.
33311 stands for Agricultural Implement Manufacturing.
333112 stands for Lawn and Garden Equipment Manufacturing.

Visit NFPA’s Market Information Website to access our NAICs-based resources and other market reports, or if you have questions contact Eric Armstrong at earmstrong@nfpa.com or 414-778-3372.

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