What are NAICS and SIC industry codes and how do I use them?

Many business databases and other research tools use industry codes to classify and organize industries.  This article explains the industry code classification systems and how to use them in your research.

The information below is probably more information than most resources would care to know about the different industry code systems.  If you have the choice of whether to use the NAICS or SIC in a database or other resource, always choose the NAICS code because it is Newer.  If you’re in a hurry and just want to know how and why to use the codes, skip to the end of the article and watch the video.  If you want to know more detail about the codes, read on.

NAICS

The term, NAICS, refers to the North American Industry Classification System. NAICS is the Census Bureau’s “system for classifying business establishments. It is the first economic classification system to be constructed based on a single economic concept. Economic units that use like processes to produce goods or services are grouped together.” The system is hierarchical with more broad industries at the top of the numerical range. More specific industries have more numbers. For an example of this hierarchical arrangement, visit this page at the official NAICS site.

NAICS codes are used in the Economic Census as well as in a number of different databases (Business Source Complete, Mergent Online, Hoover’s all use NAICS). To look up a code for a particular industry, visit the official NAICS website and do a keyword search for the industry.

The NAICS system was created in 1997 to replace the older SIC codes. SIC codes are no longer updated, while the NAICS codes were last updated in 2007. Since many resources use only NAICS or only SIC codes, it is important to have both the NAICS codes and SIC codes when doing business research. To convert SIC codes to NAICS codes (or vice versa), take a look at the SIC and NAICS Correspondence Tables.

SIC

The Standard Industrial Classification System, or SIC, is a numerical scheme used to classify businesses according to industry type. Companies in the same industry were assigned the same number or SIC code. For example, General Motors, Ford Motor Corporation, Honda, and Toyota were all assigned the SIC code of 3711.

The SIC system began in the 1930′s and was last updated in 1987. Critics of the system in the early 1990′s called for a newer system, because the SIC codes did not keep up with current industries. Therefore, the North American Industry Classification System was created in 1997.

While the NAICS system is more up-to-date than the SIC system, many databases and print resources still use SIC codes exclusively. Therefore, it is important to use both the NAICS codes and SIC codes when doing business research. To convert SIC codes to NAICS codes (or vice versa), take a look at the SIC and NAICS Correspondence Tables.

How to use industry codes in your research

The video below demonstrates how to use industry codes in searching Business Source Complete and Hoover’s Online.