Description of the Annual Survey of Manufactures and M3 Benchmark Data => GENERAL The estimates for the 1994 Annual Survey of Manufactures are based on reports from a representative sample of approximately 58,000 manufacturing establishments and administrative-record information for approximately 170,000 establishments. These estimates represent the portion of the manufacturing population accounted for by establishments with paid employees. Nonemployers are defined as out-of-scope of the ASM. The results of the survey provide estimates for employment, plant hours, payrolls, value added by manufacture, capital expenditures, cost of materials, inventories, value of industry shipments, and fuels and electric energy consumed for most manufacturing industries. Establishments are classified in manufacturing industries by industry definitions described in the 1987 edition of the Standard Industrial Classification (SIC) Manual. => SCOPE AND USE OF ANNUAL SURVEY The 1994 ASM is the 37th survey of this type conducted by the Bureau of the Census to provide the key measures of manufacturing activity for industry groups and important industries for intercensal years. These key measures, as well as other detailed statistics for manufacturing, were collected in the censuses of manufactures; the three most recent censuses covered the years 1992, 1987, and 1982. An annual survey was conducted for each of the years between censuses starting with 1949. During intercensal periods, these annual surveys provide a continuous series of basic statistics for industries and furnish benchmarks for current business indicators and for measures of industrial production and productivity. The survey also provides significant data in connection with planning for industrial mobilization. => DESCRIPTION OF THE SURVEY SAMPLE In 1992, there were approximately 370,000 individual manufacturing establishments. For sample efficiency and cost considerations, the 1992 manufacturing population was partitioned into two components for developing estimates within the ASM; a mail stratum and a nonmail stratum. -> Mail stratum. The mail stratum of the survey is comprised of larger single-location manufacturing companies and all manufacturing establishments of multiunit companies (companies that operate at more than one physical location). Approximately 230,000 of the 370,000 establishments in the 1992 census were assigned to the mail stratum. On an annual basis, the mail stratum is supplemented with larger, newly active single-location companies identified from a list provided by the Internal Revenue Service (IRS) and new manufacturing locations of multiunit companies identified from the Census Bureau's Company Organization Survey (COS). For the 1994 survey, a new sample of approximately 58,000 individual establishments was selected from the mail stratum assembled from the 1992 census. Supplemental samples representing both 1993 and 1994 births (newly active establishments that were not included in the 1992 census) were also selected. Establishments selected for the sample will be mailed an ASM survey questionnaire for each year through 1998. The 1994-98 ASM sample design is similar to the one used since 1984. Companies in the 1992 Census of Manufactures with manufacturing shipments of at least $500 million were defined as company certainties. For these large companies, each manufacturing establishment is included in the mail sample. For the 1994-98 sample, there are approximately 650 certainty companies collectively accounting for over 18,000 establishments. For the remaining portion of the mail component of the survey, the establishment was defined as the sample unit. All establishments with 250 employees or more were defined as employment certainties. In addition, all establishments producing products in SIC 3571 (Electronic Computers) were defined as certainties. Across these three arbitrary certainty classes, there were approximately 25,000 establishments included in the sample with certainty. Collectively, these certainty establishments accounted for approximately 80 percent of the total value of shipments in the 1992 Census of Manufactures. Smaller establishments in the remaining portion of the mail stratum were sampled with probabilities ranging from .02 to 1.00. The initial probabilities of selection assigned to these establishments were proportionate to a measure-of-size determined for each establishment. The measure-of-size was a function of the establishment's 1992 industry classification, it's 1992 product class data, and the historical variability of the year-to-year estimates of the product class estimates. For each product class (1,755) and four-digit industry (459), a desired reliability constraint was specified. Using a technique developed by Dr. James R. Chromy of the Research Triangle Institute, the initial establishment probabilities were optimized such that the expected sample satisfied all industry and product class reliability constraints while the sample size was minimized. This technique reduces the likelihood of selecting nonrepresentative samples for individual product classes or industries. This method of assigning probabilities based on product class shipments is motivated by our primary desire to produce reliable estimates of both product class and industry shipments. The high correlation between shipments and employment, value-added, and other general statistics assures that these variables will also be well represented by the sample. The actual sample selectionprocedure uses an independent chance of selection method (Poisson sampling) which permits us to prevent small establishments from being selected in consecutive samples without introducing a bias into the survey estimates. -> Nonmail component. The initial nonmail component of the survey was comprised of approximately 140,000 small, single-establishment companies that were tabulated as administrative records in the 1992 Census of Manufactures. The nonmail stratum is also supplemented annually using the list of newly active single-location companies provided by the IRS and payroll cutoffs. Companies with payroll below the payroll cutoff are added to the nonmail stratum. For this portion of the population, sampling is not used. The data for this group are estimated based on selected information obtained annually from the administrative records of the IRS and Social Security Administration (SSA). This administrative information, which includes payroll, total employment, industry classification, and physical location, is obtained under conditions which safeguard the confidentiality of both tax and census records. => DESCRIPTION OF THE ESTIMATING PROCEDURE Most of the ASM estimates derived for the mail stratum are computed using a difference estimator. At the establishment level, there is a strong correlation between the current year data values and the corresponding 1992 (base) data values. Therefore, within the mailed stratum, for each item at each level of aggregation, an estimate of the "difference" between the current year and the base year is computed from sample cases and added to the corresponding base year values. For the 1993-1997 ASM estimates, the 1992 Census of Manufactures values serve as the base year. For the 1998 ASM, the base will be updated to be the 1997 Census of Manufactures. Due to the positive year-to-year correlation, estimates derived using this methodology are generally more reliable than comparable estimates developed from the current sample data alone. Estimates for the capital expenditures variables are not generated using the difference estimator because the year-to-year correlations are considerably weaker. The standard linear estimator is used for these variables. For the nonmail stratum, estimates for payroll and employment are directly tabulated from the administrative- record data provided by IRS and SSA. Estimates of data other than payroll and employment are developed from industry averages. Although the nonmail stratum contains approximately 170,000 individual establishments in 1994, it accounts for less than 2 percent of the estimate for total value of shipments at the total manufacturing level. Corresponding estimates for the mail and nonmail components are combined to produce the estimates included in this publication. Call 301-457-4769 with questions regarding the annual survey of manufactures.