Factoryless Goods Producer Classification Proposal Withdrawn

Withdrawing proposal for a Factoryless Goods Producer Classification in NAICS 2017.

In a resounding victory for actual manufacturers—the people that make things—the Office of Management and Business reported on August 8 that the proposal to create a “Factoryless Goods Producer” classification for the NAICS 2017 has been withdrawn.

PMPA has been on the forefront of challenging the classification, which would have created a class of phantom manufactures that did not actually manufacture goods, but rather purchased finished goods for resale, and possibly from foreign sources. 

On May 22, the administration announced the U.S. Census Bureau was considering a proposal to count a business as a manufacturer, even if they outsource all of the transformation steps traditionally considered production activities, or manufacturing. The proposal would have counted some activities outsourced overseas as U.S. manufacturing and included financiers and others as manufacturers even though they never visit a shop floor.

Among PMPA’s objections to the scheme were the following:

• NAICS is based on the primary activity of an establishment 
• NAICS is for classifying domestic activities only
• If manufacturing processes are not actually required for a “manufacturing” classification, the statistics produced by such a distorted definition are virtually useless

“This is an important victory for U.S. businesses, and we applaud the administration for recognizing the flawed thinking behind this proposal,” says Mike Kobylka, executive director of PMPA. “This proposal would have created a class of phantom manufacturers. The NAICS classification system has never and should never take into account foreign sourced production processes.”

Originally posted on PMPAspeakingofprecision.com blog.