Standard Industrial Classification - Establishments (SIC-E) 1980
Establishments in wholesale trade are primarily engaged in buying merchandise for resale to retailers to industrial, commercial, institutional, farm or professional business users to other wholesalers or in acting as agents or brokers in buying merchandise for, or selling merchandise to, such persons or companies on a commission basis.
The determination of whether a particular business (such as a hardware dealer) is a wholesaler or retailer is based primarily on the "class of customer" criterion. If a business derives the largest portion of its gross margin from sales to businesses, government establishments, institutions, etc. rather than from sales to household consumers or private users, it will be classified as a wholesaler.
Certain trade establishments are classified as wholesalers whether they sell to other businesses or household consumers, for the following reasons: 1) due to the generally large sales to industrial, commercial, institutional and other business users by the industry as a whole and 2) because of the businesses' difficulties in delineating between sales to other businesses and sales to individual users. Such businesses deal in the following types of commodities: office and store furniture, equipment and supplies lumber and building materials farm supplies fuel oil, and all types of machinery and equipment.
The installation of prefabricated building equipment and materials by general contractors and special trade contractors is classified to construction. Similar installation work performed as a service incidental to sale by employees of an establishment selling prefabricated equipment and materials is classified to the appropriate industry of Wholesale Trade Division.
For purposes of industrial classification, wholesale establishments are classified in three- digit industry groups and four-digit industries according to the principal lines of commodity sold.
Wholesalers may also be classified by type of operation, but this classification is independant of the industrial classification. As indicated in the first paragraph the two principal types of operations are:
1) Wholesale Merchants - Establishments primarily engaged in buying and selling merchandise on their own account. In addition, they may perform one or more of the following related functions: breaking bulk, providing delivery service to customers, operating warehouse facilities for storage of the goods they sell. Included in this category are wholesalers known as: drop shippers or desk jobbers, export merchants, import merchants, mail order wholesalers, rack jobbers or voluntary general wholesale distributors. Wholesale merchants also include other wholesale operations sometimes known as assemblers of primary products which are primarily engaged in purchasing products outright from farmers, loggers, fishermen and trappers. Also included are petroleum bulk tank plants and truck distributors which operate on own account and certain manufacturers' sales branches which are separate establishments, i.e. which carry a stock of merchandise and are primarily engaged in wholesaling activity. Manufacturers' sales branches which do not carry stock of their own are classified as extensions of manufacturing establishments.
2) Agents and Brokers - Establishments primarily engaged in buying and/or selling, on a commission basis, products owned by others. They may be known as an auction company, commission merchant, import agent or broker, export agent or broker, manufacturers' agent, purchasing agent or resident buyer and selling agent, and may deal in any type of product including primary and petroleum products. Marketing Boards which are designed to stabilize prices by controlling production of agricultural products are included as wholesalers in the appropriate industry.
Establishments included in retail trade are those primarily engaged in retail dealing, i.e. buying commodities for resale to the general public for personal or household consumption and in providing related services such as installation and repair. In general, retail establishments are classified by kind of business according to the principal lines of commodities sold and services provided. Processing which is incidental or subordinate to the selling activity is sometimes carried on in retail stores, e.g. tea blending or spice grinding in food stores. Ancillary activities are associated with some kinds of retail establishments, e.g. warehouses or garages operated by department or chain stores.
Establishments such as farm machinery dealers and dealers in farm supplies which sell to the farmer as a farm operator are considered to be in wholesale trade but those which sell to farmers as household consumers, e.g. food or apparel stores are included in retail trade. On the other hand, lumber and building materials dealers, fuel dealers and sellers of office furniture, machines and equipment, of industrial machinery, of commercial and professional furniture and of machinery and equipment are classified in wholesale whether they sell mainly to other businesses or to household consumers. In this Division, the concept of "primarily engaged in" must be interpreted differently from its treatment in other Divisions of the classification (cf. Introduction, C.4).
Many government establishments engage in activities which are also carried out by non-government establishments and as a consequence such government establishments are classified to the same industrial category as their non-government counterparts. There remain however, three types of government establishments engaged in activities which are not found in the non-government universe and which are therefore, identified as providing Government Services. These are:
a) establishments engaged in activities of a purely governmental nature - national defence, public order and safety, immigration services, foreign affairs and international assistance, and general services which cover government activities (e.g. legislatures, taxation, etc.);
b) establishments which direct, support, control and otherwise administer activities carried on largely, but by no means exclusively, by non-government establishments. These activities can be grouped into those which relate to the maintenance and development of human resources and those whose primary concern is with economic development;
c) establishments such as small municipalities which may engage in a wide range of government and non-government activities but whose size precludes the possibility of producing principal statistics for each of these activities.
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