The Office of Management and Budget, or OMB, was tasked with revising the SIC system to reflect changing economic conditions.
The OMB established the Economic Classification Policy Committee in 1992 to develop a new system representative of the current industrial climate.
The result was the North American Industry Classification System, or NAICS, a collaborative effort between Canada, the U.S. and Mexico.
This gives more precise information on establishment and worker activities than the SIC system, but changed the meaning of the classifications somewhat, making some time series of data hard to sustain accurately.
The fourth digit distinguishes the specific industry sector, so a code of "3672" indicates that the business is concerned with "Printed Circuit Boards."
The Bureau of Labor Statistics updates the codes every three years and uses SIC to report on work force, wages and pricing issues.
For example, administrative assistants in the automotive industry support all levels of the business, yet the SIC defines these employees as part of the "Basic Sector" of manufacturing jobs when they should be reported as "Non-Basic."
As a result, and thirdly the SIC has been slow to recognize new and emerging industries, such as those in the computer, software, and information technology sectors.
Each division encompasses a range of SIC codes:[9][10] To look at a particular example of the hierarchy, SIC code 2024 (ice cream and frozen desserts) belongs to industry group 202 (dairy products), which is part of major group 20 (food and kindred products), which belongs to the division of manufacturing.