Statistical Classification of Economic Activities in the European Community, Rev. 1.1 (2002)

Code:  D
Description:  Manufacturing
Definition:  The manufacturing activity is the mechanical, physical or chemical transformation of materials, substances or components into new products. The materials, substances or components transformed are raw materials that are products of agriculture, forestry, fishing, mining or quarrying as well as products of other manufacturing activities.

The units in the manufacturing section are often described as plants, factories or mills and characteristically use power-driven machines and materials-handling equipment. However, units that transform materials or substances into new products by hand or in the worker's home and those engaged in selling to the general public products made on the same premises from which they are sold, such as bakeries and custom tailors, are also included in this section.

Manufacturing units may process materials or may contract with other units to process their materials for them. Both types of units are included in manufacturing.

The new manufactured product may be finished in the sense that it is ready for utilization or consumption, or it may be semi-finished to become an input for further manufacturing. For example the product of the alumina refinery is the input used in the primary production of aluminum; primary aluminum is the input to an aluminum wire drawing plant; and aluminum wire is the input for a manufacture of fabricated wire products.

Assembly of the component parts of manufactured products is considered manufacturing, except in cases where the activity is appropriately classified in any class of division 45 (Construction).

Assembly and installation of machinery and equipment in mining, manufacturing, commercial or other units, when carried out as a specialized activity, is classified in the same class of manufacturing as manufacture of the item installed.

Assembly and installation of machinery and equipment which is performed as a service incidental to the sale of the goods by a unit primarily engaged in manufacturing, wholesale trade or retail trade, is classified with its main activity.

Maintenance and repair of industrial, commercial and similar machinery and equipment is, in general, classified in the same class as the manufacture of the goods.

Substantial alteration, renovation or reconstruction of goods is generally considered to be manufacturing.

Manufacture of specialized components and parts of, and accessories and attachments to, machinery and equipment is, as a general rule, classified in the same class as the manufacture of the machinery and equipment for which the parts and accessories are intended. Manufacture of non-specialized components and parts of machinery and equipment, e.g. engines, pistons, electric motors, electrical assemblies, valves, gears, roller bearings, is classified in the appropriate class of manufacturing, without regard to the machinery and equipment in which these items may be included.

The boundaries of manufacturing and the other sectors of the classification system can be somewhat blurry. The manufacturing activity is engaged in the transformation of materials into new products. The output is a new product. However, the definition of what constitutes a new product can be somewhat subjective. As clarification, the following activities are considered manufacturing in NACE:

– Milk pasteurizing and bottling
– Fresh fish processing (oyster shucking, fish filleting)
– Printing and related activities
– Ready-mixed concrete production
– Leather converting
– Wood preserving
– Electroplating, plating, metal heat treating and polishing
– Fabricating signs and advertising displays
– Rebuilding or remanufacturing machinery (e.g., automobile engines)
– Ship repair and renovation
– Tyre retreading.

Conversely, there are activities that are sometimes considered manufacturing, but which for NACE are classified in another section, (i.e., not classified as manufacturing). They include:

– Logging, classified in section A (Agriculture, Hunting and Forestry)
– Benification of ores and other minerals, classified in section C (Mining)
– The construction of structures and fabricating operations performed at the site of construction classified in section F (Construction)
– The activity of breaking of bulk and redistribution in smaller lots, including packaging, repackaging or bottling of products, such as liquors or chemicals; the customized assembly of computers; sorting of scrap; mixing of paints to customer order; and cutting of metals to customer order, produce a modified version of the same product, not a new product and is classified to section G (Wholesale and Retail Trade).

However, repair of office and computing machinery is classified in class 72.50. Repair of household appliances, equipment and furnishings, motor vehicles and other consumer goods are, as a general rule, classified in the appropriate class of division 50 (Sale, maintenance and repair of motor vehicles and motorcycles; retail sale of automotive fuel) or 52 (Retail trade, except of motor vehicles and motorcycles; repair of personal and household goods) in accordance with the kind of goods which are repaired.