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NAICS Code List
NAICS Code List
The NAICS code list is utilized by businesses but primarily the US federal government to categorize businesses into an industry segment. This segment is then given a code, and all who fall in that segment or code can use the code number to identify what they do merely by stating the numerical classification.
History of NAICS Code List
The NAICS code list is an extension or perhaps a revision of the SIC code list. The Standard Industrial Classification (SIC) was formed during The Great Depression to segment businesses into industry classifications. It worked for decades when change was slow and the slow moving federal government infrequently updated the list. The SIC list was last updated in 1987.
This infrequent updating did not give much allowance for new industries or classifications. Many codes were stuck in the 1930’s and with the rise of Information Technology (IT) whole new industries called out to be classified. In the 1990’s the federal government from many different departments developed the North American Industrial Classification System (NAICS) code list, pronounced nakes. North America was used to also encompass Mexico and Canada (NAFTA was big at this time).
NAICS Code List Structure
The NAICS code list is a six digit classification which provides more sub-categorization that the four digit SIC code list. The first two digits identify the industry sector (there are twenty sectors, SIC had only ten). An example for an Electrical Contractor whose code is 238210, the first two digits stand for Construction (23). The third digit (8) is industry sub-sector (Specialty Trade Contractors), fourth digit (2) is industry group (Building Equipment Contractors), and fifth (1) is industry (Electrical Contractors and Other Wiring Installation Contractors).
The sixth digit is used when an industry or need is country specific. So, among countries the first five digits of a code will be constant but the sixth digit can change.
For the example of an electrical contractor, NAICS 238210, it breaks down like this
23 - Construction (Industry Sector)
238 - Specialty Trade Contractors (Industry Sub sector)
2382 - Building Equipment Contractors (Industry Group)
23821 - Electrical Contractors and Other Wiring Installation Contractors (Industry)
238210 - Universal (Country)
NAICS Code List Usage
Government agencies utilize the NAICS code list extensively to find vendors. Searching the Central Contractor Registration (CCR), purchasing or contracting will seek vendors by NAICS code and narrow from there. Many contract solicitations will have a requirement that only businesses listed under a certain NAICS code are eligible to apply. The upside is that there is rarely a limit to the number of codes a business can list.
Indeed, many SBA certified minority businesses will wind up having a large list of NAICS code because opportunities may exist for them outside of standard codes. Also, subjectivity plays a part as contracting and purchasing department may not know or realize the best code to use. There are times when a solicitation will come out that suits your business to a “T” but will have an inexplicable NAICS code listed. Therefore, a business would have to add that NAICS code to pursue the contract. Once, the contract was awarded a business will want to stay listed, probably out of convenience, but also for future possible contracts. A way to uncover possible codes used for contract your business could do is to look at codes listed for competitors, or businesses which are already successful in government contracting.
The summation is to add as many NAICS code as are applicable to a business is able to perform, and not expect a single code will cover all possibilities.
The Twenty NAICS Sectors
11 - Agriculture, Forestry, Fishing and Hunting
21 - Mining
22 - Utilities
23 - Construction
31-33 - Manufacturing
42 - Wholesale Trade
44-45 - Retail Trade
48-49 - Transportation and Warehousing
51 - Information
52 - Finance and Insurance
53 - Real Estate and Rental and Leasing
54 - Professional, Scientific, and Technical Services
55 - Management of Companies and Enterprises
56 - Administrative and Support and Waste Management and Remediation Services
61 - Education Services
62 - Health Care and Social Assistance
71 - Arts, Entertainment, and Recreation
72 - Accommodation and Food Services
81 - Other Services (except Public Administration)92 - Public Administration
NAICS is updated every five years and this volume is the most recent being published in 2012. Grab this book to see what codes your business can be classified as doing. Many business provide more than service, and that not even in the coding scheme.
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