A GPS for Engineering Economics Students (An Answer to: What Business Am I In?)

Transcription

1 A GPS f Enginring Economics Studnts (An Answr to: What Businss Am I In?) Rob Ruckr, IME Dpt. Orgon Stat Univrsity, 2003 Abstract Th purpos of this papr is to incras motivation f studnts to larn conomics by showing thm a global positioning systm that dscribs thir currnt potntial, conomic wk unit catgis. By knowing whr thy fit into th ovrall conomic schm, th studnt may fl m connctd to thir conomic ara, as wll as its parnt and childrn units, satisfying th nginring dsir to s whr thy ar in th big pictur. Th mchanism to do this positioning is givn by NAICS, th Nth Amrican Industrial Classification Systm. First introducd in 1997, NAICS uss a classification systm dvlopd by th Unitd Stats, Mxico, and Canada to consistntly and comprhnsivly covr all of th conomic units within ths thr countris. Using NAICS, a studnt can drill-down from th highst lvl, consisting of 20 conomic scts, all th way down to a national industry businss unit, 5 lvls down. Givn any NAICS cod, a walth of statistical and conomic infmation concrning industry standards, trnds, and histical data is thn availabl. Classifying All Economic Units in Nth Amrica Th purpos of ths nots is to bring to your attntion th rsults of a massiv fft to classify and catgiz all conomic production in th U.S., Mxico, and Canada, using a singl approach f all thr countris. Knowing this rally big pictur allows us to look at a particular industry, such as Automobils, and s whr it fits in th ovrall conomic production wld. F this industry, w could find its parnt industris and its child industris. Looking in th NAICS manual w s that it is in sct: Manufacturing, subsct: Transptation Equipmnt Manufacturing, Industry Group: Mot Vhicl Manufacturing, NAICS group: Automobil & Light Duty Mot Vhicl Manufacturing and finally U.S. Industry: Automobil Manufacturing. Statistics Canada, Mxico s Instituto Nacional d Estadistica, Gographia Infmatica (INEGI), and th Economic Classification Policy Committ (ECPC) of th US cratd this common classification systm to dscrib all of th conomic production of ths thr Nth Amrican NAFTA trading partnrs. Th rsulting classification systm sts up a singl framwk within which to collct, classify, analyz, intr-compar, and publish infmation on both inputs and outputs within and btwn ths Nth Amrican countris. This is a nw classification systm that suprsds th oldr Standard Industry Classification (SIC) of th 1980 s. Th nw classification is basd on a common concptual framwk of conomic units (calld stablishmnts) that hav similar production procsss. Economic units that hav similar production procsss ar classifid in th sam 1

2 industry and th boundaris of ach unit of classification ar drawn with diffrncs in production procsss in mind. Whrvr you wk, whthr f yourslf with somon ls, if you produc provid a srvic, it falls within on of ths classifications. Knowing this big pictur, allows you to contribut at your own local lvl by supplying infmation xtracting it. (Knowing som of ths dtails will mak you look good in your ganization as wll!). What Dos Th Classification Look Lik? NAICS (2002) is procss basd. Th classification of industris is basd on how thy procss thir sourc ntitis into final goods and srvics. It is hirarchical, lik its prdcss, th Standard Industry Classification (SIC), but has bn updatd to show th nw industris that hav mrgd in th last part of th 20th cntury and th vry first part of th 21 st. Additionally, shifting prspctivs that hav changd som classification catgis sinc th 1997 vrsion was first issud. NAICS uss a coding systm to idntify particular industris and position thm in th classification hirarchy. Th classification systm is as follows, with ach digit pair of digits having spcific maning. Not: I hav introducd th trm lvl as an additional prspctiv on th dpth of partitioning rprsntd by th digit cod, this trm isn t usd in th manual.: Tabl 1: NAICS Digit Manings Digit Positions Classification Lvl on and two sct (th broadst catgy, lvl 1) thr subsct (lvl 2) four industry group (lvl 3) fiv six th NAICS industry (a common dsignation btwn th thr nations, lvl 4) th national industry that may may not b common btwn countris (lvl 5) Th Sct Brakdown NAICS initially classifis all conomic activitis into 20 gnral scts. Blow is a sht dscription of ach sct. Notic that thr is a Nam, which is a structural dscription and rfrs to gnrally rcognizabl xtrnal faturs, and a procss dscription which dscribs how sourc ntitis ar transfmd (procssd) into goods and srvics, ithr final intrmdiat. I hav also includd th total industris in ach sct, at th brakdown. F xampl, f th 2 8/2/03 NAICS.fm r.r.

3 Agricultur, Fstry, Fishing and Hunting (11) sct, thr ar a total of 64 catgis of industry among th thr countris at th lowst classification lvl. Tabl 2: NAICS 2-Digit Sct s with Totals Sct Nam (Structural Dscription) Procss Dscription Numbr of Catgis 11 Agricultur, Fstry, Fishing, Hunting grow crops, rais animals, harvst timbr, fish and animals from farms, ranchs, natural habitats Mining xtracting naturally occurring minral solids such as coal and ; liquid minrals such as crud ptrolum; and gass such as natural gas. Othr prparations associatd with th mining activity at th min sit as part of mining activity. This includs: crushing, washing, scrning, and flotation Utilitis gnrat, transmit and/ distribut lctricity, gas, stam, watr and rmoving swag through a prmannt infrastructur of lins, mains, and pips. 23 Construction rct building and structurs (including additions), havy construction othr than buildings; altrations, rconstruction, installations, and maintnanc and rpairs Manufacturing mchanical, physical, chmical transfmation of matrials, substancs, componnts into nw products Wholsal Trad slling arrang f purchas sal of goods f rsal; capital durabl non-consumr goods; and raw and intrmdiat matrials and supplis usd in production, and providing srvics incidntal to th sal of th mrchandis Rtail Trad rtailing mrchandis gnrally in small quantitis to th gnral public and providing srvics incidntal to th sal of th mrchandis Transptation and Warhousing provid transptation of passngrs and cargo, warhousing and sting goods, scnic and sightsing transptation, and suppting ths activitis Infmation distributing infmation and cultural products, provid mans to transmit distribut ths products as data communications, and procssing data Financ and Insuranc cration, liquidation, chang in ownrship of financial assts (financial transactions) and/ facilitating financial transactions 42 Sct Structural Dscription Procss Dscription Numbr of Catgis 3

4 Tabl 2: NAICS 2-Digit Sct s with Totals Sct Nam (Structural Dscription) Procss Dscription Numbr of Catgis 53 Ral Estat and Rntal and Lasing 54 Profssional Scintific and Tchnical Srvics 55 Managmnt of Companis and Entrpriss 56 Administrativ and Suppt and Wast Managmnt and Rmdiation Srvics rnting, lasing, othrwis allowing th us of tangibl intangibl assts (xcpt copyrightd wks) and providing rlatd srvics prfm profssional, tchnical, and scintific srvics f th oprations of othr ganizations holding of scuritis of companis and ntrpriss f th purpos of owning controlling influnc influncing thir managmnt dcisions, administring, ovrsing, and managing othr stablishmnts of th sam company ntrpris and nmally undrtaking th stratgic ganizational planning and dcision making of th company ntrpris. prfm routin suppt activitis f th day-to-day oprations of othr ganizations Educational Srvics 62 Halth Car and Social Assistanc provid instruction and training in a wid varity of subjcts 17 provid halth car and social assistanc f individuals 71 Arts Entrtainmnt and Rcration 72 Accommodation and Food Srvics 81 Othr Srvics (Excpt Public Administration) oprat provid srvics to mt varid cultural, ntrtainmnt, and rcrational intrsts of thir patrons provid customrs with lodging and/ prparing mals, snacks, bvrags f immdiat consumption provid srvics not lswhr spcifid, including rpairs, rligious activitis, grant-making, advocacy, laundry, prsonal car, dath car, and othr prsonal srvics Sct Structural Dscription Procss Dscription Numbr of Catgis 4 8/2/03 NAICS.fm r.r.

5 Tabl 2: NAICS 2-Digit Sct s with Totals Sct Nam (Structural Dscription) Procss Dscription Numbr of Catgis Public Administration administration, managmnt, and ovrsight of public programs by Fdral, Stat, and local govrnmnts Totals 1179 Sct Structural Dscription Procss Dscription Numbr of Catgis Drilling Down Into Various Industrial Scts Nxt, I would lik to show a fw drill-downs from som of th scts abov. Ths ntris ar from th NAICS manual but ar only a tiny slction sinc thr ar 1179 classifications ncompassd. What I hav don is simply slct a fw ntris from som of th scts and followd thir sub-classifications down to thir logical nd-points. An Exampl Discussion of Sct 11, Agricultur, Fstry, Fishing & Hunting Rcall that this is th sct charactrizd by th procsss of growing crops, raising animals, and harvsting timbr, fish and animals from farms, ranchs, natural habitats. Th first display blow shows four lvls of nstd conomic units, nding with Soyban Farming. (S NAICS Digit Manings on pag 2 f th manings of th digits.) Th intrprtation is that Soyban Farming is a NAICS industry and has th sam maning btwn all thr nations: U.S., Canada, and Mxico. Notic that th classification stops with 5 digits, rflcting a dcision to nd sub-classification. Howvr, if som nw imptant variant of Soyban Farming, prhaps rlatd to gntic nginring, wr to mrg as an conomically imptant industry, an additional digit is availabl. W s that Soyban Farming is within th industry group Oilsd & Grain Farming, which is again a common dsignation among th trading partnrs. Oilsd and Grain Farming is within th subsct Crop Production. Finally, Crop Production is positiond with th sct Agricultur, Fstry, Fishing and Hunting. 11 Agricultur, Fstry, Fishing & Hunting 11 Agricultur, Fstry, Fishing & Hunting 111 Crop Production 1111 Oilsd & Grain Farming Soyban Farming An Exampl Discussion of Sct 22, Utilitis Notic in this cas that thr is no 3-digit cod. This mans that th 3-digit and 4-digit cods ar th sam. Whn w gt down to th cods, thr is a possibility that th industry dsignations will diffr btwn th thr nations. (S NAICS Digit Manings on pag 2 f a dfini- 5

6 tion of th maning of th digits.). In fact, th 6th digit is dsignd to absb this invitabl varity of dsignations among th thr nations. 22 Utilitis 22 Utilitis 2211 Elctric Powr Gnration, Transmission, and Distribution Elctric Powr Gnration Hydrolctric Powr Gnration Fossil Ful Elctric Powr Gnration Nuclar Elctric Powr 2212 Natural Gas Distribution Natural Gas Distribution Furthr Exampls of NAICS Positioning Notic that manufacturing ncompasss thr sct cods thus allowing f currnt and futur xpansion. Manufacturing includs 473 () subcatgis and blow is just on of vry many! Manufacturing 31 Manufacturing 313 Txtil Mills Fibr, Yarn & Thrad Mills Yarn Txturing, Throwing & Twisting Mills 42 Wholsal Trad 42 Wholsal Trad 421 Wholsal Trad Durabl Goods 4211 Mot Vhicl/Mot Vhicl Parts & Supply Wholsal Mot Vhicl Parts (Usd) Wholsal Rtail Trad Rtail Trad 442 Furnitur & Hom Furnishing Sts 4422 Hom Furnishing Sts Flo Covring Sts 61 Educational Srvics 61 Educational Srvics 6113 Collgs, Univrsitis & Profssional Schools 6116 Othr Schools and Instruction All Othr Schools and Instruction Automobil Driving Schools 62 Halth Car and Social Assistanc 62 Halth Car and Social Assistanc 621 Ambulaty Halth Car Srvics 6 8/2/03 NAICS.fm r.r.

7 6214 Outpatint Car Cntrs Outpatint Mntal Halth /Substanc Abus Cntrs 624 Social Assistanc 6242 Community/Emrgncy & Othr Rlif Srvics Community Housing Srvics Tmpary Shltrs 71 Arts, Entrtainmnt & Rcration 71 Arts, Entrtainmnt & Rcration 713 Amusmnt, Gambling & Rcration Industris 7139 Othr Amusmnt & Rcration Spts Cntrs Fitnss & Rcrational Spts Cntrs 92 Public Administration 92 Public Administration 922 Justic, Public Ordr & Safty Activitis 9221 Justic, Public Ordr & Safty Activitis Fir Protction 926 Administration of Economic Programs 9261 Administration of Economic Programs Rgulation & Administration of Utilitis Summary This articl introducs th Nth Amrican Industrial Classification Systm (NAICS) that assigns a cod to all th catgis of conomic production stablishmnts in th U.S., Mxico, and Canada. Th purpos is to giv studnts a viw of th kinds of industris that ar out thr and what rlations thy bar to thir parnt and childrn industris. Th NAICS sct tabl, showing th 20 highst lvl industrial subdivisions is shown togthr with a numbr of xampl to th dscriptions possibl using ths classifications. Rfrncs Nth Amrican Industry Classification Systm (NAISC), Excutiv Offic of th Prsidnt, Offic of Managmnt and Budgt, 2002, ISBN , NTIS Ordr# PB