It Takes a Factory to Make a Manufacturer

How can you call yourself a manufacturer if you don’t manufacture anything? The Economic Classification Policy Committee (ECPC) of the Census Bureau is considering changing the definition of manufacturing to include “Factoryless Goods Producers” (FGPs) as part of an update to the North American Industry Classification System (NAICS) 2017.

They say “A factoryless goods producer (FGP) establishment outsources all of the transformation steps traditionally considered manufacturing (for example, the actual physical chemical or mechanical transformation of inputs into new outputs), but undertakes all of the entrepreneurial steps and arranges for all required capital, labor and material inputs required to make a good.” Factoryless Goods Producer Fact Sheet

Buying stuff from other manufacturers isn’t manufacturing—it’s wholesale trade. If an establishment doesn’t actually manufacture something, why should it be classified as a manufacturer? If a company doesn’t have a factory and means of transforming inputs into goods, why should that be classified as manufacturing? If a firm doesn’t employ workers to transform inputs into finished goods, why is that manufacturing?

We submitted our comments on this issue.

Visit this link, then:

1. Type in “NAICS for 2017″ in quotes in the search box labeled "Rules, Comments, Adjudications or Supporting Documents."
2. Click search.
3. Click “Comment Now!”
4. Follow instructions for submitting your comments.

There are many reasons to oppose the creation of a type of manufacturer called a factoryless goods producer. I put a bunch of them in my comments. But you only have to ask one logical question: How can you call yourself a manufacturer if you don’t manufacture anything?

And how does that help create statistics we can use if “manufacturer” no longer means “a company that manufactures?”

 

Originally posted on PMPAspeakingofprecision.com blog.