Classification of Industries

Before venturing into the nature of chemical and allied industries and understanding its role, it is instructive to look at the classification system used by governments to analyze and track the various sectors of the nation’s economy. The U.S. government developed a standardized system in the 1930s called the Standard Industrial Classification (SIC) system for classifying industries. The SIC system has also been adopted by other countries. Major business and industry sectors are represented by a four-digit numerical SIC code on the basis of common characteristics. These SIC codes are hierarchical, with the first two digits representing the major business/industry sector and the third and fourth digits representing subclassifications and specializations within the major sector (https://www.osha.gov/pls/imis/sic_manual.html).

The United States has been transitioning to a newer classification system—the North American Industry Classification System (NAICS)—since the late 1990s (www.census.gov/eos/www/naics). NAICS codes are six-digit numbers based on a top-down hierarchical structure similar to the SIC system. Each SIC code has a corresponding unique NAICS code in the newer system. Both the SIC and NAICS codes are used by various entities in the United States. The SIC and NAICS codes of industries of primary relevance to chemical engineers are shown in Table 2.1.

Table 2.1 Classification of Chemical and Related Industries

The manufacturing industries have been assigned codes beginning with 31, 32, or 33 under the NAICS. Chemical and allied products belong to the manufacturing industries sector, with chemical products carrying the NAICS code beginning with 325. The combined contributions of chemical, petroleum/coal, paper, and rubber products amounted to nearly $670 billion in the United States, equal to nearly 33% of all manufacturing in 2012. Chemical products alone (SIC code 28/NAICS code 325) accounted for almost 18% of the manufacturing sector.²

2. U.S. Department of Commerce, Bureau of Economic Analysis Data.

Chemical Products are further subclassified into Basic Inorganic Chemicals, Industrial Gases, Basic Organic Chemicals, Fertilizer Products, Polymer Products, Pharmaceuticals, and many others. Some of the important outputs of the Chemical Industry (NAICS Code 325) and Related Industries (NAICS Codes 322, 324 and 326) are briefly described in the following sections.