SIC Codes vs NAICS Codes

Background

SIC Codes were established in 1937. The system was built with a strong foundation and was updated numerous times until 1987. The planning of NAFTA as a Free Trade economic community between the U.S.A, Mexico, and Canada led to a new approach for a classification system for the member countries. SIC codes required an update and were in need of more specific classifications. In the interest of the member countries, a new system (NAICS) was established in 1997.

The SIC system still remains the most popular industry classification system, as its use by data and marketing companies has been firmly entrenched and developed for over 40 years. Even though NAICS was established in 1992, the classification system hasn’t entirely caught on. It is similar to when the U.S.A. tried to implement the metric system. Businesses, organizations, and others have grown accustomed to the use of SIC codes and have continued to classify companies, search for companies, and target companies based on SIC codes.

Use Today

Though the US government stopped updating SIC codes in 1987, private data organizations have continued to update the SIC system to very specific classifications, even more specific than NAICS codes. This has continuously evolved with changing marketplaces, technological innovations, and expert analysis of trends. At the most defined levels, there are well over 10,000 SIC codes in use and continuously updated as compared to only 1,012 NAICS codes. For targeting and marketing purposes, the specificity of SIC codes far exceeds the NAICS system.

Currently, we are seeing the most use of NAICS codes with US government contracting and statistical applications. At State and Federal levels, SIC and NAICS are both being used, but it varies by department. In the private sector, SIC codes are the most commonly used industry classification system. The SIC system is entrenched in private business databases, while the switchover to NAICS has encountered numerous difficulties. One of the biggest challenges is the 5-year gap between updates for new classifications and accounting for the new industries that emerge in that time frame (ie: e-cigarettes). Another is the lack of specificity of the industries as compared to the 6,7,8 extensions to the SIC system. Fortunately, SICCODE representatives are experts in both SIC and NAICS classification systems and can assist with all code marketing, targeting, selection and verification services (contact SICCODE).

Category Structure for SIC and NAICS

SIC Code vs NAICS Comparison

At the most specific classification, one NAICS code can be further broken down into more specific SIC Code Extended categories. In the example below, NAICS Code 541330 is the most specific classification in the NAICS system, however it can be further classified into 40 SIC Code Extended categories - thereby providing a more refined and specific targeting system.

Differences Between SIC and NAICS Codes

SIC Codes and NAICS: Have entirely different numbering systems

• NAICS: Developed in conjunction with the U.S., Canadian, and Mexican governments
• SIC Codes: Developed solely by the U.S. government
• NAICS: Groups together establishments that use the same or similar processes to produce goods or services
• SIC Codes: Groups together establishments based on either demand or production
• NAICS: Actively used for government statistical purposes
• SIC Codes: Actively used for business targeting in the private sector