Part IV--Proposed New Industry Structure for Furniture Manufacturing Section A--NAICS Structure North American Industry Classification System (NAICS) Agreement Number 14 This Document represents the proposed agreement on the structure of the North American Industry Classification System (NAICS) for the following subsector: Furniture Manufacturing The detailed NAICS structure along with a brief description of the structure is attached (Attachments 1 and 2). Each country agrees to release a copy of the proposed NAICS structure to interested data users. Comments received will be shared among the countries and additional discussions will be held before a final decision on the structure is made. Each country may add additional detailed industries, below the 4-digit level of NAICS, as necessary to meet national needs, so long as this additional detail aggregates to a 4-digit NAICS level in order to ensure full comparability among the three countries. This NAICS structure was presented and provisionally accepted at the NAICS Committee meeting held on September 27, 1995 - September 29, 1995 in Mexico City, Mexico. Accepted Signature Date Canada /S/ Jacob Ryten 9/29/95 Mexico /S/ Enrique Ordaz 9/29/95 United States /S/ Jack E. Triplett 9/29/95 ATTACHMENT 1--NAICS STRUCTURE XX Furniture Manufacturing XXX Furniture Manufacturing XXXX Mattress Manufacturing XXXX Blind and Shade Manufacturing XXXX Wood Furniture Manufacturing XXXX Metal Furniture Manufacturing XXXX Other Furniture Manufacturing Attachment 2--North American Industry Classification System Draft Classification for: Furniture Manufacturing Representatives of the statistical agencies of Canada, Mexico, and the United States agree to a draft industrial classification for these industries. The draft classification applies to the subsector, Furniture Manufacturing. This subsector contains one industry group and five industries. The subsector will be part of the Manufacturing sector of the classification. A General Outline Furniture Manufacturing includes establishments that produce articles such as chairs, beds, mattresses, dressers, tables and desks for human comfort, convenience and utility. Processes used in the manufacture of furniture include the cutting, bending, molding, laminating and assembly of such materials as wood, metal, glass, plastics, and rattan. In addition, design and fashion trends play an important part in the production of furniture. The production process for furniture is not solely bending metal, cutting and shaping wood, or extruding and molding plastic. The integrated design of the article for esthetic qualities, and to carry out its function efficiently, is also a major part of the process of manufacturing furniture, though design services are also sometimes purchased by furniture manufacturers from industrial designers. Furniture manufacturing establishments tend to specialize in making articles primarily from one material, such as wood or metal, because the production processes required to make a wooden table, for example, are quite different from the production processes for metal tables. However, it is unusual to make furniture exclusively from a single input. A wooden table might have metal brackets and a wooden chair a fabric or plastic seat. Some of the processes used in furniture manufacturing are similar to processes that are used in other segments of manufacturing. For example, cutting and assembly occurs in the production of wood trusses that are classified in the Wood Product Manufacturing, Except Furniture subsector. However, the multiple processes that distinguish wood furniture manufacturing from wood product manufacturing warrant inclusion of wooden furniture manufacturing in the Furniture Manufacturing subsector. Metal furniture manufacturing uses techniques that are also employed in the manufacturing of roll formed products in the Fabricated Metal Product Manufacturing sector. The molding process for plastic furniture is similar to the molding of other plastic products. However, plastic furniture producing establishments tend to specialize in furniture. Though the production processes, products, and industry practices in furniture manufacturing are relatively mature ones, the existing classification structures in the three North American countries differed so extensively that substantial restructuring in all three countries was required in order to achieve international comparability. Even so, international comparability could be achieved only at a relatively high level of aggregation (for example, wood furniture manufacturing). Barriers to further expansion in NAICS detail are discussed in the following section, and additional information may be provided by countries in discussions of their own national industries. Limitations and Constraints of the Classification In the Furniture Manufacturing industries, most activities that were identified in one country exist in the others. However, often an activity is not economically significant to the same degree in all countries. For example, wood office furniture manufacturing in Canada is too small to publish, and wood store furniture manufacturing is too small to publish in both Canada and Mexico. It is not always possible to separately identify production process industries for end use categories. For example, United States manufacturers tend to specialize in household furniture or office furniture because differences in uses require differences in production. However, in Mexico household and office furniture are often produced in the same establishment, and some blurring of the household/office distinction is apparent even in the U.S. For these reasons, only broad categories for wood and metal furniture and furniture made from other materials were created for NAICS. Each country will publish additional categories that comprise subdivisions of NAICS industries to present data for activities that are nationally significant. For those users requiring detailed commodity information, each country will publish information on the products of these industries. Efforts are also underway to harmonize the commodity classifications to allow for greater comparability of these statistics. Relationship to ISIC Most 4-digit NAICS industries in this subsector are contained within Class 3610, Manufacture of Furniture, of the current International Standard Industrial Classification of all Economic Activities (ISIC, Revision 3) of the United Nations. A notable exception is the manufacture of blinds and shades that ISIC classifies into different ISIC divisions by type of input material. In North America, production of blinds and shades of multiple materials occurs in a single establishment, so it is neither possible nor desirable to separate them by type of material in the classification system. For this reason, both Mexico and the United States currently classify all blind and shade manufacturing in a single industry. Other differences between NAICS and ISIC include the classification of wood and metal partitions and serving carts, which are placed in the respective wood or metal products divisions of ISIC. In NAICS, these manufacturing activities are placed in Furniture Manufacturing since the manufacturing processes are essentially identical to those used for furniture. In spite of these differences, this NAICS subsector is substantially the same as ISIC Class 3610, because most of the production in this subsector occurs in the industries that are compatible with this ISIC class. Some Changes to the National Classifications For Canada, the NAICS Furniture Manufacturing subsector restructures the existing classification from an end use classification to a production process and input form, i.e., into wood, metal, and other furniture industries. In the case of wood furniture, the Canadian classification was structured both by input raw material (wood) and by end use, i.e., wooden household and upholstered household furniture. For furniture of metal and other materials, Canadian industries were restructured to the NAICS pattern. Other Canadian changes include the movement of wooden kitchen cabinets and bathroom vanities from the Wood Industries major group to this subsector, and the grouping of all kinds of shades, blinds and window hardware into a single NAICS industry. For Mexico, the significant change is one of concept. Formerly, Mexico had no separately identified furniture subsector. Thus, this subsector will be entirely new. Changes at the industry level are relatively small, as the current structure in Mexico classifies wood furniture in the wood product manufacturing industries, metal furniture in the fabricated metal manufacturing industries, etc. For the United States, changes parallel those in Canada. The existing U.S. structure classifies furniture by both inputs and end use in some detail. Like Canada, the U.S. structure has considerable detail for wood furniture, but unlike Canada, the U.S. also has substantial detail for metal furniture. A considerable amount of internal restructuring was required to achieve the NAICS design. However, the U.S. will retain substantial national industry detail below the level of the NAICS Furniture Manufacturing industries, e.g., wood household furniture is distinguished from wood office furniture at the 5-digit national detail level. Another important change for the United States is the inclusion of custom furniture in this sector. The manufacture of custom furniture was formerly classified in the retail sector. The change was made to agree with the Canadian and Mexican classification of the activity because the Canadian and Mexican treatment meets the production-oriented criterion for NAICS. Other changes include the movement of wood kitchen cabinets and wooden chair frames from the 1987 SIC Lumber and Wood Products, Except Furniture major group because the production processes are essentially identical to those for furniture. Achievement of Objectives The classification meets the objectives for the North American Industry Classification System (NAICS). It includes industries that group establishments with similar production processes, that is, it applies the production-oriented economic concept. In the main, the hierarchical structure of the classification also follows the production concept. The classification achieves comparability for the three participating countries. Based on existing data, all three countries expect to be able to publish data regularly at the industry (4-digit) level of the structure. All countries agree on the detailed definitions of the industries. Other objectives of the NAICS project are not as relevant in this area of the classification as in others. These objectives are the delineation of new and emerging industries, service industries and industries engaged in the production of advanced technologies. The industrial sector in question is relatively mature, generally produces goods and has employed relatively stable technology. Therefore, the emphasis is on the objectives listed above. The industries have high specialization ratios, and they are economically significant. The detail (4-digit) level and structures of the classification are balanced in size. This enhances the classification's suitability for sampling and other aspects of survey operations. Finally, though disruptions to time series exist, the major changes are well identified and can be taken into account in linking time series. Section B-Annex: United States National Industry Detail As explained in the Structure presentation of this notice, for a number of reasons 4-digit industries in the NAICS industry subsector presented in Part IV, Section A--Attachment 1, contain less detail than is currently in the U.S. SIC system, and less detail than is required to meet important analytical requirements in the U.S. The three country agreement on NAICS envisions that each country may develop national detailed industries below the NAICS industry level, so long as the national detail can be aggregated to the NAICS classification, thus assuring full North American comparability. The ECPC is proposing U.S. 5-digit industry detail for the NAICS industry subsector covered in Part IV of this notice. For cases where no 5-digit detail is shown, the ECPC is proposing that the NAICS 4-digit industries will also represent the most detailed U.S. industries. TABLE 1 The definitions of status codes are as follows: E-existing industry; N-new industry; R-revised industry; and * means "part of". The abbreviation NEC is used for Not Elsewhere Classified. 1997 NAICS and U.S. description Status Code 1987 SIC Code 1987 SIC description XX Furniture Manufacturing XXX Furniture Manufacturing XXXX Mattress Manufacturing E 2515 Mattresses and Bedsprings XXXX Blind and Shade Manufacturing E 2591 Drapery Hardware and Blinds and Shades XXXX Wood Furniture Manufacturing XXXXX Wood Household Furniture Manufacturing, Except Upholstered R *2426 Hardwood Dimension and Flooring Mills (wooden chair frames and chair seats) *2499 Wood Products, NEC (wood laundry hampers) 2511 Wood Household Furniture, Except Upholstered 2517 Wood TV and, Radio Cabinets *5712 Furniture Stores (custom made furniture except cabinets) XXXXX Wood Kitchen Cabinet Manufacturing R 2434 Wood Kitchen Cabinets *5712 Furniture Stores (custom wood cabinets) XXXXX Upholstered Wood Household Furniture Manufacturing E 2512 Wood Household Furniture, Upholstered XXXXX Wood Office and Public Building Furniture Manufacturing R *2426 Hardwood Dimension and Flooring Mills (office chair frames and chair seats) *2521 Wood Office Furniture *2531 Public Building and Related Furniture (wood furniture for public buildings) *2599 Furniture and Fixtures, NEC (wood industrial work benches and stools, and other wood furniture such as ship furniture) *3952 Lead Pencils, Crayons, and Artists' Materials (wood drafting tables and boards) XXXXX Wood Office and Store Fixture, Partition, Shelving, and Locker Manufacturing R *2541 Wood Office and Store Fixtures, Partitions, Shelving, and Lockers (except custom architectural woodwork, millwork, and fixtures) XXXXX Custom Architectural Woodwork, Millwork, and Fixtures N *2541 Wood Office and Store Fixtures, Partitions, Shelving, and Lockers (architectural woodwork, millwork, and fixtures) XXXX Metal Furniture Manufacturing XXXXX Metal Household Furniture Manufacturing R 2514 Metal Household Furniture *3499 Fabricated Metal Products, NEC (metal household frames and furniture parts) XXXXX Metal Office and Public Building Furniture Manufacturing R *2522 Office Furniture, Except Wood (metal office furniture) *2531 Public Building and Related Furniture (metal furniture for public buildings) *2599 Furniture and Fixtures, NEC (metal industrial work benches and stools, and other metal furniture such as ship furniture) *3499 Fabricated Metal Products, NEC (metal frames and furniture parts) *3952 Lead Pencils, Crayons, and Artists' Materials (metal drafting tables and boards) *3999 Manufacturing Industries, NEC (barber and beauty chairs) XXXXX Metal Office and Store Fixture, Partition, Shelving and Locker Manufacturing R *2542 Office and Store Fixtures, Partitions, Shelving and Lockers, Except Wood (metal office and store fixtures, partitions, shelving, and lockers) XXXX Other Furniture Manufacturing R *2499 Wood Products, NEC (laundry hampers made from rattan, reed or willow) 2519 Household Furniture, NEC *2522 Office Furniture, Except Wood (office furniture not made of wood or metal) *2531 Public Building and Related Furniture (other furniture not made of wood or metal for public buildings) *2542 Office and Store Fixtures, Partitions, Shelving and Lockers, Except Wood (office and store fixtures, partitions, shelving, and lockers not made of metal) *2599 Furniture and Fixtures, NEC (other furniture or fixtures) TABLE 2 The abbreviation "pt" means "part of", @ means time series break has been created that is greater than 3% of the 1992 value of shipments for the 1987 SIC industry. The abbreviation NEC is used for Not Elsewhere Classified. 1987 SIC code 1987 SIC description 1997 U.S. description 2426 Hardwood Dimension and Flooring Mills Hardwood Flooring Millwork Manufacturing, Including Flooring (pt) (Included in the Wood Product Manufacturing, Except Furniture subsector) Stock and Turnings Other Wood Product Manufacturing (pt) (Included in the Wood Product Manufacturing, Except Furniture subsector) Office Chair Frames and Chair Seats Wood Office and Public Building Furniture Manufacturing (pt) Chair Frames for Nonupholstered Furniture (Household) Wood Household Furniture Manufacturing, Except Upholstered (pt) Chair Frames for Upholstered Furniture (Household) Upholstered Wood Household Furniture Manufacturing (pt) Hardwood Dimension Except Flooring Hardwood Dimension Mills (Included in the Wood Product Manufacturing, Except Furniture subsector) 2434 Wood Kitchen Cabinets Wood Kitchen Cabinet Manufacturing (pt) 2499 Wood Products, NEC Wood Tubs and Vats, Jewelry and Cigar Boxes Other Wood Container Manufacturing (pt) (Included in the Wood Product Manufacturing, Except Furniture subsector) Wood Laundry Hampers Wood Household Furniture Manufacturing, Except Upholstered (pt) Laundry Hampers Made from Rattan, Reed or Willow Other Furniture Manufacturing (pt) 2511@ Wood Household Furniture, Except Upholstered Wood Household Furniture Manufacturing, Except Upholstered (pt) 2512 Wood Household Furniture, Upholstered Upholstered Wood Household Furniture Manufacturing 2514 Metal Household Furniture Metal Household Furniture Manufacturing (pt) 2515 Mattresses and Bedsprings Mattress Manufacturing 2517@ Wood TV and, Radio Cabinets Wood Household Furniture Manufacturing, Except Upholstered (pt) 2519@ Household Furniture, NEC Other Furniture Manufacturing (pt) 2521 Wood Office Furniture Wood Office and Public Building Furniture Manufacturing (pt) 2522@ Office Furniture, Except Wood Metal Office Furniture Metal Office Furniture Manufacturing (pt) Office Furniture Not Made of Wood or Metal Other Furniture Manufacturing (pt) 2531@ Public Building and Related Furniture Blackboards All Other Miscellaneous Manufacturing (pt) (To Be Included in Miscellaneous Manufacturing subsector) Seats for Motor Vehicles Motor Vehicle Fabric Accessory and Seat Manufacturing (pt) (Included in Transportation Equipment Manufacturing subsector) Metal Furniture for Public Building Metal Office and Public Building Furniture Manufacturing (pt) Wood Furniture for Public Building Wood Office and Public Building Furniture Manufacturing (pt) Other Furniture Not Made of Wood or Metal for Public Buildings Other Furniture Manufacturing (pt) 2541@ Wood Office and Store Fixtures, Partitions, Shelving, and Lockers Except Architectural Woodwork, Millwork and Fixtures Wood Office and Store Fixture, Partition, Shelving and Locker Manufacturing (pt.) Custom Architectural Woodwork, Millwork and Fixtures Custom Architectural Woodwork, Millwork, and Fixtures 2542@ Partitions and Fixtures, Except Wood Metal Office and Store Fixtures, Partitions, Shelving, and Lockers Metal Office and Store Fixture, Partition, Shelving and Locker Manufacturing (pt) Office and Store Fixtures, Partitions, Shelving, and Lockers Not Made of Metal Other Furniture Manufacturing (pt) 2591 Drapery Hardware and Blinds and Shades Blind and Shade Manufacturing 2599@ Furniture and Fixtures, NEC Hospital Beds Orthopedic, Prosthetic and Surgical Appliance and Supply Manufacturing (pt) (To Be Included in Miscellaneous Manufacturing subsector) Metal Industrial Work Benches and Stools, and Other Metal Furniture Such As Ship Furniture Metal Office and Public Building Furniture Manufacturing (pt) Wood Industrial Work Benches and Stools, and Other Wood Furniture Such As Ship Furniture Wood Office and Public Building Furniture Manufacturing (pt) Other Furniture and Fixtures Other Furniture Manufacturing (pt) 3499 Fabricated Metal Products, NEC Metal Frames and Furniture Parts, Household Metal Frames and Furniture Parts, Office Metal Household Furniture Manufacturing (pt) Metal Office and Public Building Furniture Manufacturing (pt) Powder Metallurgy Metal Stamping and Powder Metallurgy Manufacturing (pt) (Included in Fabricated Metal Product Manufacturing subsector) Metal Boxes Metal Shipping Container, Barrel, Drum, Keg, Pail, Bin, Box, etc. Manufacturing (pt) (Included in Fabricated Metal Product Manufacturing subsector) Safe and Vault Locks Hardware Manufacturing, Including Locks (pt) (Included in Fabricated Metal Product Manufacturing subsector) Metal Aerosol Valves Other Valve and Pipe Fitting Manufacturing (pt) (Included in Fabricated Metal Product Manufacturing subsector) Other Metal Products All Other Miscellaneous Fabricated Metal Product Manufacturing (pt) (Included in Fabricated Metal Product Manufacturing subsector) 3952@ Lead Pencils, Crayons, and Artist's Materials Metal Drafting Tables and Boards Metal Office and Public Building Furniture Manufacturing (pt) Wood Drafting Tables and Boards Wood Office and Public Building Furniture Manufacturing (pt) Drawing and India Ink Printing Ink Manufacturing (pt) (Included in Chemical Manufacturing subsector) Other Lead Pencil and Art Goods Manufacturing (pt) (To be included in Miscellaneous Manufacturing subsector) 3999 Manufacturing Industries, NEC Beauty and Barber Chairs Metal Office and Public Building` Furniture Manufacturing (pt) Burnt Wood Articles Other Wood Product Manufacturing (pt) (Included in Wood Product Manufacturing, Except Furniture subsector) Fur Bleaching, Currying, Scraping, Tanning and Dyeing Leather and Hide Tanning and Finishing Manufacturing (pt) (Included in Leather and Allied Product Manufacturing subsector) Lamp Shades of Paper and Textile Other Lighting Equipment Manufacturing (pt) (Included in Electrical Equipment, Appliance and Component Manufacturing subsector) Matches Other Miscellaneous Chemical Product Manufacturing (pt) (Included in Chemical Manufacturing subsector) Metal Products, Such As Combs, Hair Curlers, Etc. All Other Fabricated Metal Product Manufacturing (pt) (Included in Fabricated Metal Product Manufacturing subsector) Plastics Products, Such As Combs, Hair Curlers, Etc. All Other Plastic Product Manufacturing (pt) (Included in Rubber and Plastic Product Manufacturing subsector) Flexographic Printing Eyeglass Frames for the Trade Commercial Flexographic Printing (pt) (Included in Printing and Related Support Activities subsector) Gravure Printing Eyeglass Frames for the Trade Commercial Gravure Printing (pt) (Included in Printing and Related Support Activities subsector) Lithographic Printing Eyeglass Frames for the Trade Commercial Lithographic Printing (pt) (Included in Printing and Related Support Activities subsector) Screen Printing Eyeglass Frames for the Trade Commercial Screen Printing (pt) (Included in Printing and Related Support Activities subsector) Other Printing Eyeglass Frames for the Trade Other Commercial Printing (pt) ( Included in Printing and Related Support Activities subsector) Tape Measures Hand and Edge Tool Manufacturing (pt) (Included in Fabricated Metal Product Manufacturing subsector) Other All Other Miscellaneous Manufacturing (pt) (To Be Included in Miscellaneous Manufacturing subsector) 5712 Furniture Stores Custom Made Furniture, Except Cabinets Wood Household Furniture Manufacturing, Except Upholstered (pt) Custom Wood Cabinets Wood Kitchen Cabinet Manufacturing (pt) Other Than Custom Made Furniture To Be Included in the Retail sector Description of Changes to the U.S. System A number of the changes listed in this section were made for reasons of international comparability. Where one or more of the three North American countries had different definitions of an industry classification, adjustments to the definitions in one or more countries were required. In constructing NAICS, the three countries agreed to move, where change was required to attain international comparability, in the direction of the country or countries whose existing classification definitions most closely corresponded to the production-oriented concept adopted for NAICS. Cases where the U.S. changed are listed below; other cases where Canada or Mexico moved toward the U.S. classification are not, of course, listed in this section. Three activities were transferred out of 1987 SIC Furniture major group. Motor vehicle seats were transferred from part of 1987 SIC 2531, Public Building and Related Furniture, into Motor Vehicle Fabric Accessory and Seat Manufacturing in the 1997 NAICS subsector for Transportation Equipment Manufacturing. This change was made for international comparability and because there is very little production similarity between the manufacture of automobile seats and the production of church pews and like products that are in 1987 SIC 2531. Hospital beds were transferred from part of 1987 SIC 2599, Furniture and Fixtures, NEC, into Orthopedic, Prosthetic, and Surgical Appliance and Supply Manufacturing in the 1997 NAICS subsector for Miscellaneous Manufacturing. This change was necessary to align the U.S. classification to that of Canada and Mexico. Blackboards were transferred from part of 1987 SIC 2531, Public Building and Related Furniture, into All Other Miscellaneous Manufacturing in the 1997 NAICS subsector for Miscellaneous Manufacturing. This change was necessary to align the U.S. classification system with that of Mexico. Eight activities were transferred into the 1997 NAICS Furniture Manufacturing subsector. Three of the eight were transformed from 1987 SIC NEC industries. Wooden chair frames and seats were transferred from part of 1987 SIC 2426, Hardwood Dimension and Flooring Mills, and classified in this subsector. This change was necessary to align the U.S. classification with that of Mexico and Canada, and because the production processes are similar. Wood laundry hampers were transferred from part of 1987 SIC 2499, Wood Products, NEC, and placed by component material in their respective NAICS industries. This change was necessary to align the U.S. classification with that of Canada. Custom wood household furniture was transferred from part of 1987 Retail Industry SIC 5712, Furniture Stores, into Wood Household Furniture. This change was necessary to align the U.S. classification with that of Mexico and Canada, and because the production process is essentially that of furniture manufacturing and the retailing activity is subsidiary. Wood kitchen cabinets were transferred from 1987 SIC Major Group 24, Lumber and Wood Products, Except Furniture. This change reflects production processes that are essentially identical with those for furniture. The change also facilitated and increased the international comparability with Canada and Mexico. Custom wood kitchen cabinets were transferred from part of 1987 Retail SIC 5712, Furniture Stores, into Wood Kitchen Cabinet Manufacturing, for international comparability, as noted above. Drafting tables and boards were transferred from 1987 SIC 3952, Lead Pencils, Crayons, and Artists' Materials, and classified in the Furniture Manufacturing subsector. This change was necessary to align the U.S. classification with that of Canada and Mexico, and because the production process is similar to other furniture manufacturing. Metal frames and furniture parts were transferred from 1987 SIC 3499, Fabricated Metal Products, NEC, and classified in the Furniture Manufacturing subsector. This change was necessary to align the U.S. classification with that of Canada. Barber and beauty chairs were transferred from 1987 SIC 3999, Manufacturing Industries, NEC, into Metal Office Furniture Manufacturing. This change was necessary to reflect the common production processes and similarities between beauty and barber shop chair manufacturers and other furniture manufacturers. A new industry was created for Custom Architectural Woodwork, Millwork, and Fixtures from part of SIC 2541, Wood Office and Store Fixtures, Partitions, Shelving and Lockers. Also several activities were transferred within the Furniture Manufacturing subsector. In addition, 1987 SIC 2517, Wood TV and Radio Cabinets, was combined with Wood Household Furniture Manufacturing because production in 1987 SIC 2517 has declined in the U.S. and the production processes are similar in both industries. The number of Furniture Manufacturing industries declined from 13 in 1987 to 12 in 1997. For time series linkage, seven of the 13 1987 industries are comparable within three percent of the 1997 industries.