Census of Manufactures

=> General

The census of manufactures is taken every 5 years, for years ending in 2
and 7. Data for the intervening years are collected in the annual survey of
manufactures (ASM).

The 1992 Census of Manufactures is published in three report series: the
industry series, the geographic area series, and the subject series. The
industry series is issued in 83 separate reports, each of which provides
statistics for individual industries or groups of industries. The
geographic area series has a separate report for each State and the
District of Columbia. The subject series has three reports, the General
Summary, Concentration Ratios in Manufacturing, and Manufacturers'
Shipments to the Federal Government. A Location of Manufacturing Plants
file is also available from the census. In addition to the printed reports,
the census data also are available on CD-ROM.

=> Scope of Census and Definition of Manufacturing

The 1992 Census of Manufactures covers all establishments with one paid
employee or more primarily engaged in manufacturing as defined in the 1987
Standard Industrial Classification (SIC) Manual. This is the system of
industrial classification developed by experts on classification in
Government and private industry under the guidance of the Office of
Information and Regulatory Affairs, Office of Management and Budget. This
classification system is used by Government agencies as well as many
organizations outside the Government.

The SIC Manual defines manufacturing as the mechanical or chemical
transformation of substances or materials into new products. The assembly
of component parts of products also is considered to be manufacturing if
the resulting product is neither a structure nor other fixed improvement.
These activities are usually carried on in plants, factories, or mills that
characteristically use power-driven machines and materials-handling
equipment.

Manufacturing production is usually carried on for the wholesale market,
for transfers to other plants of the same company, or to the order of
industrial users rather than for direct sale to the household consumer.
Some manufacturers in a few industries sell chiefly at retail to household
consumers through the mail, through house-to-house routes, or through
salespersons. Some activities of a service nature (enameling, engraving,
etc.) are included in manufacturing when they are performed primarily for
trade. They are considered nonmanufacturing when they are performed
primarily to the order of the household consumer.

=> The Census of Manufactures and Annual Survey of Manufactures

The census of manufactures is a detailed and comprehensive tabulation of
economic activity in the manufacturing sector. The ASM is conducted for
each of the 4 years between the censuses using a probability-based sample
drawn from the census panel. A detailed discussion of the ASM methodology
is in appendix B. While the basic data items, like employment, payroll,
cost of materials, and value of shipments, are collected in both the census
and ASM, the census collects more detailed information for the cost of
materials and value of shipments. Also, in the census years, the ASM panel
is requested to supply additional data on assets, capital expenditures,
retirements, depreciation, rental payments, cost of purchased services, and
foreign content of materials consumed. In both the census and ASM years,
the ASM panel is requested to report data on supplemental labor costs.

As a comprehensive measure of the manufacturing sector, the census of
manufactures is used as a benchmark for other Government data series.  The
Bureau of Economic Analysis (BEA) uses the data in the national income
accounts and the input/output matrixes. The Federal Reserve Board uses the
data for benchmarking the indexes of production. The U.S. Census Bureau
uses the census of manufactures for benchmarking many of its sample surveys
in the manufacturing sector.

=> Establishment Basis of Reporting

The census of manufactures is conducted on an establishment basis. A
company operating at more than one location is required to file a separate
report for each location. The ASM also is conducted on an establishment
basis, but separate reports are filed for just those establishments
selected in the sample. Companies engaged in distinctly different lines of
activity at one location are requested to submit separate reports if the
plant records permit such a separation and if the activities are
substantial in size.

In 1992, as in earlier years, a minimum size limit was set for inclusion of
establishments in the census. All establishments employing one person or
more at any time during the census year are included. The same size
limitation has applied since 1947 in censuses and annual surveys of
manufactures. In the 1939 and earlier censuses, establishments with less
than $5,000 value of products were excluded.  The change in the minimum
size limit in 1947 does not appreciably affect the historical comparability
of the census figures except for data on number of establishments for a few
industries. This report includes some information for separately operated
administrative offices, warehouses, garages, and other auxiliary units that
service manufacturing establishments of the same company (see Auxiliaries).

=> Manufacturing Universe and Census Report Forms

The 1992 Census of Manufactures universe includes approximately 380,000
establishments. The amount of information requested from manufacturing
establishments was dependent upon a number of factors. The more important
considerations were the size of the company and whether it was included in
the annual survey of manufactures. The methods of obtaining information for
the various subsets of the universe to arrive at the aggregate figures
shown in the publication are described below:

-> Small Single-Establishment Companies Not Sent A Report Form.

In the 1992 Census of Manufactures, approximately 143,000 small single-
establishment companies were excused from filing reports.  Selection of
these small establishments was done on an industry-by-industry basis and
was based on annual payroll and total shipments data as well as on the
industry classification codes contained in the administrative records of
Federal agencies. The cutoffs were selected so that these administrative-
records cases would account for no more than 3 percent of the value of
shipments for all manufacturing. Generally, all single-establishment
companies with less than 5 employees were excused, while all establishments
with more than 20 employees were mailed forms.

Information on the physical location of the establishment, as well as
information on payrolls, receipts (shipments), and industry classification,
was obtained from the administrative records of other Federal agencies
under special arrangements, which safeguarded their confidentiality.
Estimates of data for these small establishments were developed using
industry averages in conjunction with the administrative information. The
value of shipments and cost of materials were not distributed among
specific products and materials for these establishments but were included
in the product and material "not specified by kind" (n.s.k.) categories.

The industry classification codes included in the administrative-records
files were assigned on the basis of brief descriptions of the general
activity of the establishment. As a result, an indeterminate number of
establishments were erroneously coded at the four-digit SIC level. This was
especially true whenever there was a relatively fine line of demarcation
between industries or between manufacturing and nonmanufacturing activity.

Sometimes these administrative-records cases were only given a two- or
three-digit SIC group. For the 1992 Census of Manufactures, these
establishments were sent a separate classification form, which requested
information on the products and services of the establishment. This form
was used to code many of these establishments to the four-digit SIC level.
Establishments that did not return the classification form were coded later
to those four-digit SIC industries identified as "not elsewhere classified"
(n.e.c.) within the given two- or three-digit industry groups.

As a result of these situations, a number of small establishments may have
been misclassified by industry. However, such possible misclassification
has no significant effect on the statistics other than on the number of
companies and establishments.

The total establishment count for individual industries should be viewed as
an approximation rather than a precise measurement. The counts for
establishments with 20 employees or more are far more reliable than the
count of total number of establishments.

-> Establishments Sent A Report Form.

The over 237,000 establishments covered in the mail canvass were divided
into three groups:

  ASM Sample Establishments.

This group consisted of approximately 62,000 establishments covering all
the units of large manufacturing establishments as well as a sample of the
medium and smaller establishments. The probability of selection was
proportionate to size (see Annual Survey of Manufactures).

In a census of manufactures year, the ASM report form (MA-1000) replaces
the first page of the regular census form for those establishments included
in the ASM.  In addition to information on employment, payroll, and other
items normally requested on the regular census form, establishments in the
ASM sample were requested to supply information on assets, capital
expenditures, retirements, depreciation, rental payments, supplemental
labor costs, and costs of purchased services.  See documentation file
MC92GS.EXP, section 2, for an explanation of these items.

The census part of the report form is 1 of approximately 200 versions
containing product, material, and special inquiries. The diversity of
manufacturing activities necessitated the use of these many forms to
canvass the 459 manufacturing industries. Each form was developed for a
group of related industries.

Appearing on each form was a list of products primary to the group of
related industries as well as secondary products and miscellaneous services
that establishments classified in these industries were likely to be
performing. Respondents were requested to identify the products, the value
of each product, and, in a large number of cases, the quantity of the
product shipped during the survey year. Space also was provided for the
respondent to describe products not specifically identified on the form.

The report form also contained a materials-consumed inquiry, which varied
from form to form depending on the industries being canvassed.  The
respondents were asked to review a list of materials generally used in
their production processes. From this list, each establishment was
requested to identify those materials consumed during the survey year, the
cost of each, and, in certain cases, the quantity consumed. Once again,
space was provided for the respondent to describe significant material not
identified on the form.

Finally, a wide variety of special inquiries was included to measure
activities peculiar to a given industry, such as operations performed and
equipment used.

  Large And Medium Establishments (Non-ASM).

Approximately 112,000 establishments were included in this group. A
variable cutoff, based on administrative-records payroll data and
determined on an industry-by-industry basis, was used to select those
establishments that were to receive 1 of the approximately 200 census of
manufactures regular forms. The first page, requesting establishment data
for items such as employment and payroll, was standard but did not contain
the detailed statistics included on the ASM form. The product, material,
and special inquiry sections supplied were based on the historical industry
classification of the establishment.

  Small Single-Establishment Companies (Non-ASM).

This group consisted of approximately 63,000 establishments. For those
industries where application of the variable cutoff for administrative-
records cases resulted in a large number of small establishments being
included in the mail canvass, an abbreviated or "short" form was used.
These establishments received 1 of the approximately 80 versions of the
short form, which requested summary product and material data and totals
but no details on employment, payrolls, cost of materials, inventories, and
capital expenditures.

Use of the short form has no adverse effect on published totals for the
industry statistics; the same data were collected on the short form as on
the long form. However, detailed information on materials consumed was not
collected on the short form; thus its use would increase the value of the
n.s.k. categories.

=> Auxiliaries

Auxiliaries are establishments whose employees are primarily engaged in
performing support services for other establishments of the same company.
Data for auxiliaries are not collected in the census of manufactures, but
in the enterprise statistics survey on form ES-9200.  This form requests a
description of the functions of the auxiliary and the activities of the
establishments serviced. It also collects data on employment and payroll at
the auxiliary.

Data in files MC92SF1A through MC92SF4 of this report, as well as the files
from the industry series reports, do not include data for auxiliaries.
Auxiliaries are classified based on the principle activity of the
establishments they service. The information they report only permits
classification to the major group (two-digit SIC) level. Data in these
files are aggregated from the four-digit industry data which do not include
the auxiliaries.

Data in files MC92SA1 through MC92SA5 of this report, like the geographic
area series files, include auxiliaries. Some files in chapter 3 of the
printed report (files MC92SM*) also include auxiliaries.

Among the functions of auxiliaries are: administration, warehousing,
electronic data processing, sales, and research and development. The
principle function, based on employment, is administration. See file
MC92SM3 of this report for details.

Employees in administrative offices are concerned with the general
management of multiestablishment companies. They are responsible for the
general supervision and control of two establishments or more, such as
manufacturing plants, mines, sales branches, or stores. The functions of
these employees may include the following:

  1. Program planning, including sales research and coordination of
     purchasing, production, and distribution

  2. Company purchasing, including general contracts and purchasing methods

  3. Company financial policy and accounting

  4. General engineering, including design of production machinery and
     equipment, and direction of engineering effort conducted at the
     individual operation locations

  5. Company personnel matters

  6. Legal and patent matters

Auxiliaries may or may not be located at one of the establishments they
serve. However, they may not operate as an integral part of an
establishment they serve. When auxiliary operations are conducted at
the same location as the manufacturing operations and they serve as an
integral part thereof, they usually are included in the report of the
operating manufacturing establishment and not tabulated with auxiliaries.

A report on all separately operated auxiliaries, including those serving
nonmanufacturing establishments, will be issued as part of the enterprise
statistics program of the 1992 Economic Census.

=> Industry Classification of Establishments

Each of the establishments covered in the census was classified in 1 of 459
manufacturing industries in accordance with the industry definitions in the
1987 SIC Manual. The 1987 edition of this manual represents a major
revision for manufacturing industries from the 1972 edition and its 1977
supplement. Appendix A of the 1987 Manual notes the revisions in the four-
digit industry levels between 1972/77 and 1987.

An industry is generally defined as a group of establishments producing the
same product or a closely related group of products. The product groupings
from which industry classifications are derived are based on considerations
such as similarity of manufacturing processes, types of materials used,
types of customers, and the like. The resulting group of establishments
must be significant in terms of number, value added by manufacture, value
of shipments, and number of employees. The system operates in such a way
that the definitions progressively become narrower with successive
additions of numerical digits. For 1992, there are 20 major groups (two-
digit SIC), 139 industry groups (three-digit SIC), and 459 industries
(four-digit SIC). This represents an expansion of four-digit industries
from 452 in 1972/77 and a reduction of three-digit groups from 143 in
1972/77. Product classes and products of the manufacturing industries have
been assigned codes based on the industry from which they originate. There
are about 11,000 products identified by a seven-digit code. The seven-digit
products are considered the primary products of the industry with the same
four digits.

Accordingly, an establishment is usually classified by the products it
produces. If an establishment makes products of more than one industry, it
is classified in the industry of its primary products, that is, the
products with the largest value of shipments. The products outside of its
industry classification are considered secondary products. In a few
instances, a product may be classified in more than one industry depending
on the process used in its manufacture. For example, a sweater may be made
in a knitting mill (SIC 2253) or a cut-and-sew shop (SIC 2329). A knitting
mill, with its heavy capitalization, would be a very different operation
than the cut-and-sew shop. Once classified in the census year, these
establishments are "frozen" in their respective industries for the
following ASM years.

In either a census or ASM year, establishments included in the ASM sample
with certainty weight, other than those involved with heavily capitalized
activities described above, are reclassified by industry only if the change
in the primary activity from the prior year is significant or if the change
has occurred for 2 successive years. This procedure prevents
reclassification when there are minor shifts in product mix.

In ASM years, establishments included in the ASM sample with noncertainty
weight are not shifted from one industry classification to another. They
are retained in the industry where they were classified in the base census
year (see the Annual Survey of Manufactures). However, in the following
census year, these ASM plants are allowed to shift from one industry to
another.

The results of these rules covering the switching of plants from one
industry classification to another are that, at the aggregate level, some
industries comprise different mixes of establishments between survey years
and establishment data for such industry statistics as employment and
payroll may be tabulated in different industries between survey years.
Hence, comparisons between prior-year and current-year published totals,
particularly at the four-digit SIC level, should be viewed with caution.
This is particularly true for the comparison between the data shown for a
census year versus the data shown for the previous ASM year.

As previously noted, the small establishments that may have been
misclassified by industry are usually administrative-records cases whose
industry codes were assigned on the basis of incomplete descriptions of the
general activity of the establishment. Such possible misclassifications
have no significant effect on the statistics other than on the number of
companies and establishments.

The industry statistics shown in files MC92SF1A through MC92SF4
(employment, value added by manufacture, value of shipments, etc.) reflect
both the primary and secondary activities of the establishments classified
in those industries. However, the product statistics in table 1-5 are
shipments by all producers, regardless of the industry in which they
are classified. (See file ASM_P for these data.)

The industry value of shipments and product value of shipments are examined
with two ratios listed in file MC92SF1B.: the specialization ratio and the
coverage ratio. The specialization ratio measures the portion of industry
shipments accounted fro by the primary products of the establishments
classified in the industry. The coverage ratio is the portion of product
shipments accounted for by establishments classified in the industry.
Additional data are published in file MC92F5B of the industry series giving
further detail regarding the composition of the industry's output.

The specialization and coverage ratios are calculated for each of the four-
digit SIC industries. There are additional data on specialization in file
MC92F5A of the industry series. In this table, the industry statistics are
tabulated by the primary product class (five-digit SIC) of the
establishment.

There are some industries (four-digit SIC's) which have more than one
distinctly different kind of operation. Establishments in these industries
are further classified into subindustries. These data may be found in file
MC92F3A of the appropriate industry series reports.

=> Value of Industry Shipments Compared With Value of Product Shipments

This report shows value of shipments data for industries and products.  In
files MC92SF1A through MC92SF4, these data represent the total value of
shipments of all establishments classified in a particular industry.  The
data include the shipments of the products classified in the industry
(primary to the industry), products classified in other industries
(secondary to the industry), and miscellaneous receipts (repair work, sale
of scrap, research and development, installation receipts, and resales).
Value of product shipments shown in table 1-5 represents the total value of
all products shipped that are classified as primary to an industry.

=> Value Added By Manufacture

The first step in the calculation of value added is the conversion of the
value of shipments (including resales and miscellaneous receipts) to value
of production by adding the ending inventory of finished goods and work-in-
process inventories and subtracting the beginning inventory. The cost of
materials (including materials, supplies, fuel, electric energy, cost of
resales, and cost of contract work) is then subtracted from this value of
production to obtain value added.  (For a few industries (i.e., ship
building) where value of work done is substituted for value of shipments,
no adjustment is made for change in inventories. In a few industries where
value of production is collected, inventory adjustment is made only on the
basis of change in work-in-process inventories.)

Value added avoids the duplication in the value of shipments figure which
results from the inclusion of the shipments of establishments producing
materials and components, along with the shipments of establishments
producing finished products. It does not exclude the cost of services
purchased from other business firms, as does the concept of value added,
used in the national income accounts. (Collection of data on cost of
purchased business services at plant level presents many problems.
Advertising by multiunit companies is frequently charged at the company
level and cost either not allocated to plants or, if allocated, are only
included as part of a broader company overhead category. National income
data, on the other hand, are compiled, in part, from company rather than
plant data, such as IRS statistics of income in which advertising is
presented as a separate cost item based on company reports.) Nevertheless,
it is considered to be the best value measure available in census data for
comparing the relative economic importance of manufacturing among
industries and geographic areas.

=> Gross Product Originating And Value Added

The National income and product accounts, prepared by the Commerce
Department's Bureau of Economic Analysis (BEA), include estimates of the
gross product originating in manufacturing. As explained below, this
measure is not completely comparable to census value added.

Gross product originating (GPO) in manufacturing is that industry's share
of the Nation's output of goods and services valued at market prices before
deductions for depreciation charges. It is calculated either as the sum of
income payments (e.g., wages, profits, and interest) and other costs (e.g.,
depreciation and indirect business taxes) or as the difference between the
value of production (shipments plus change in inventories) and cost of
materials and services consumed. Census value added, on the other hand, is
calculated as the difference between the value of production and the cost
of materials consumed; the cost of purchased services is not removed. GPO
differs from the census value added not only because the BEA measure
excludes purchased services, but also because it includes sales and excise
taxes, and reflects inventory change valued at replacement cost. These
differences arise because census does not collect data for all purchased
services, defines shipments to exclude excise and sales taxes, and
calculates inventory change using the data as reported by the manufacturer.
(BEA converts inventories to a replacement cost valuation to make them
consistent with the definition of gross domestic product. The difference
between the change in reported "book value" and the change in replacement
cost values is the inventory valuation adjustment (IVA).)

Of these three differences, the GPO measure provides separate estimates of
only the taxes and the IVA. Estimates of purchased services are not
available because BEA calculates GPO using the sum of income payments and
costs method. As a result, a direct reconciliation of the GPO and census
value added measures is not possible. Furthermore, the source data used by
BEA to estimate GPO give rise to statistical differences between the two
series, especially at the more detailed industry levels. First, the profit
and depreciation portions of the income and cost component of GPO are
available only from the Internal Revenue Service in tabulations of company
level data. The BEA must convert these data to establishment-based SIC
industry estimates. A second statistical difference, which is a major
factor at the two-digit industry levels, is the industry classification
underlying the estimates of wages and salaries. The BEA uses Bureau of
Labor Statistics (BLS) tabulations of wages paid to employees covered by
unemployment insurance, while census wages and salaries are those collected
by census. While both systems use the SIC as the basis of the
classification, differences arise because Census and BLS use different
information upon which to base the classification of individual
establishments. Finally, the BEA measure includes the GPO of nonemployer
firms. These firms, which are not covered in the census of manufactures,
are usually very small and do not constitute a significant share of GPO
except in the lumber and wood products industry.

=> Geographic Area Coding

Accurate and complete information on the physical location of each
manufacturing establishment is required to tabulate the census data for the
States, metropolitan areas (MA's), counties, parishes, and corporate
municipalities including cities, towns, villages, and boroughs.

A computerized system was developed which assigned an area code number and
a prefix symbol to the mailing address before the questionnaires were
mailed. The assignment of tentative code numbers by the computer was based
on extensive reference files which have been continually updated and
expanded. The prefix symbol indicated whether the information contained in
the mailing address was sufficient to provide a clearly acceptable area
code or whether there was some question about the physical location of the
establishment. An example of this situation is when the mailing address is
a P.O. box or a central office. Respondents were required to report their
physical location (street address, municipality, county, and State) if it
differed from their mailing address.

Whenever the respondent reported a physical location different from the
mailing address, the corrected address was used to assign a geographic code
to the establishment. In addition, if the prefix symbol indicated any
question about the acceptability of the mailing address, the information
received from the respondent on the actual location was later carefully
reviewed. As in previous censuses, the mailing address of the establishment
was not always accepted as defining the physical location. For nonmail
establishments (and those single-establishment companies that did not
provide acceptable information on physical location), location information
from the Internal Revenue Service tax forms was used as a basis for coding.

With the exception of file MC92SA4, data in files MC92SA1 through MC92SA5
of this report are at the State level. File MC92SA4 includes data for
metropolitan areas with 500 manufacturing employees or more. Data for
counties and places are available in the geographic area series files.
General definitions for the geographic terms like "metropolitan area" and
"place" are included in documentation file MC92GS.EXP, Explanation of
Terms.

=> Census Disclosure Rules

In accordance with Federal law governing census reports, no data are
published that would disclose the data for an individual establishment or
company. However, the number of establishments classified in a specific
industry is not considered a disclosure, so this information may be
released even though other information is withheld.

The disclosure analysis for tables with industry statistics is based on the
value of shipments. These are the tables with data for employment, payroll,
value added by manufacture, value of shipments, etc. When the value of
shipments cannot be shown without disclosing information for individual
companies, the complete line is suppressed except the company count, number
of establishments, and new capital expenditures.  The suppressed data are
included in the higher level totals. A separate disclosure analysis is
performed on the data for new capital expenditures.

Authority to collect the census data, and provisions for its
confidentiality come from Title 13 of the United States Code.

=> Special Tabulations

Special tabulations of data collected in the 1992 Census of Manufactures
may be obtained on computer diskette or in tabular form.  The data will be
in summary form and subject to the same rules prohibiting disclosure of
confidential information (including name, address, kind of business, or
other data for individual business establishments or companies) as are the
regular publications.

Special tabulations are prepared on a cost basis. A request for a cost
estimate, as well as exact specifications on the type and format of the
data to be provided, should be directed to the Chief, Manufacturing and
Construction Division, Bureau of the Census, Washington, DC 20233.