The Industrial Classification to Organize Industries Essay

1069 Words 5 Pages
The term Industrial Classification refers to the system by which companies and industries are organized or classified by in the United States. It uses a label system called the Standard Industrial Classification (SIC) that is composed of four digits. This system started in 1937 with a four digit code in which has been modified to a six digit code and renamed to the North America Industry Classification System (NAICS). This system is used by governmental agencies to classify the different industrial areas, for example: Agriculture, Forestry, Fishing, Mining, Transportation, Construction, etc. The classification of industries was created by the United States government to be able to analyze measure and share this data with other agencies. (Pearce, 1957)
Before Industry classification was established different branches of the United States government had their own method to analyze a business in which other agencies did not use. It was difficult to share any kind of data with other agencies as they had their own methods. The need increased in the 1930’s to develop a standard method in which all agreed to be able to use.
The United States created the Standard Industrial Classification (SIC) numeric code system in which uses a top down format that starts with the general characteristics up to the specific. The first two digits are specific to the type of industry such as Agricultural, Fishing, and Mining. The next digits refer to the sub classification of such business…