Understanding NAICS Codes

by Eric Armstrong

If you’re involved in manufacturing, there is a good chance you have or will encounter NAICS codes. Depending on your position, you may be, or will need to be, very familiar with these unique series of numbers. I thought I would share a brief overview of the NAICS codes for those interested in learning more.

What are NAICS codes?

The North American Industry Classification System (NAICS) codes are the identifying numbers used by the federal government to identify and classify companies by industry for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.  Working with the United States’ 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 the classification of business establishments and presentation of statistical data, so 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 (although not always strictly) 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.

NFPA organizes many of its market information programs by NAICS codes. Visit NFPA’s Market Information at http://theieoc.com/market-information/ to find out how.

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