Standards WG meeting Eurostat Luxembourg 4 th June

Standards WG meeting Eurostat - Luxembourg 4 th June 2019 The NACE classification and the “intended use” principle: the case of enterprises which produce plastic parts and accessories exclusively to serve the automotive industry Francesca ALONZI Arianna SPERANZA ISTAT Italian National Institute of Statistics DIRECTORATE FOR ECONOMIC STATISTICS - Statistical registers on economic units 1

Topic overview 1. Classification of economic activities and products classifications 2. Empirical analysis 3. Conclusions and open issues 2 The NACE classification and the “intended use” principle: the case of enterprises which produce plastic parts and accessories exclusively to serve the automotive industry F. Alonzi & A. Speranza – Standards WG meeting – Luxembourg 4 th June 2019

Topic overview A specific unit produces plastic parts and accessories exclusively to serve the automotive industry. Italian BR NACE 22. 29 Manufacture of other plastic products (administrative sources). PRODCOM survey the collected data refer to two codes both in class 22. 29. 91. 60 Plastic parts and accessories for all land vehicles (excluding for locomotives or rolling stock) is the principal one. what a product, or an intermediate product, is used for STS colleagues propose NACE 29. 32 Italian experts of economic classifications together with BR statisticians + Eurostat 3 • • • The “intended use” principle Specialisation issues Intermediate products vs parts The NACE classification and the “intended use” principle: the case of enterprises which produce plastic parts and accessories exclusively to serve the automotive industry F. Alonzi & A. Speranza – Standards WG meeting – Luxembourg 4 th June 2019

1. Classification of economic activities and products classifications Ø NACE - The interested classes, which are both part of section C – Manufacturing, are the following: 22. 29 - Manufacture of other plastic products 29. 32 - Manufacture of other parts and accessories for motor vehicles Explanatory notes to section C – Manufacturing of the NACE Rev. 2: Manufacture of specialised 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 unspecialised 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. However, making specialised components and accessories by moulding or extruding plastics materials is included in group 22. 2. According to the above notes, the “intended use” principle has to be applied to all kind of accessories but those made of plastic. Indeed, the final part of the note seems to contradict the rule described in chapter 2 (NACE: definitions and principles) of the NACE publication: one of the main criteria applied in delineating groups and divisions of NACE concerns the uses to which the goods and services are put. 4 The NACE classification and the “intended use” principle: the case of enterprises which produce plastic parts and accessories exclusively to serve the automotive industry F. Alonzi & A. Speranza – Standards WG meeting – Luxembourg 4 th June 2019

1. Classification of economic activities and products classifications Ø CPA - Plastic equipments and their parts for motor vehicles are classified in the subcategories of class 29. 32 Other parts and accessories for motor vehicles described according to the following subcategories: 29. 32. 1 Seats for motor vehicles 29. 32. 2 Safety seat belts, airbags and parts and accessories of bodies 29. 32. 3 Parts and accessories n. e. c. , for motor vehicles 29. 32. 9 Assembly services of parts and accessories for motor vehicles n. e. c. ; assembly services of complete construction kits for motor vehicles within the manufacturing process; sub-contracted operations as part of manufacturing of other parts and accessories for motor vehicles Ø PRODCOM - According to the PRODCOM list 2017 -2018, the above components are included in the code 22. 29. 91. 60 Plastic parts and accessories for all land vehicles (excluding for locomotives or rolling stock). 5 The NACE classification and the “intended use” principle: the case of enterprises which produce plastic parts and accessories exclusively to serve the automotive industry F. Alonzi & A. Speranza – Standards WG meeting – Luxembourg 4 th June 2019

2. Empirical analysis The existence of other similar cases … 1. 1. Extraction from the PRODCOM dataset of all units with at least one record referred to product code 22. 29. 91. 60 Plastic parts and accessories for all land vehicles (excluding for locomotives or rolling stock) 1. 2. Selection of only those units which record the code 22. 29. 91. 60 as the principal one 1. 3. Linking with the NACE code recorded in the national BR 139 units which product code is in contradiction with the NACE code have been identified → 39 of them have more than 100 employees in 2017 6 The NACE classification and the “intended use” principle: the case of enterprises which produce plastic parts and accessories exclusively to serve the automotive industry F. Alonzi & A. Speranza – Standards WG meeting – Luxembourg 4 th June 2019

2. Empirical analysis - 20 units are already classified in NACE division 29 (Manufacture of motor vehicles, trailers and semi-trailers) while other 2 units are classified in NACE class 30. 91 (Manufacture of motorcycles) which also includes the manufacture of parts and accessories for motorcycles the classification of such units may be considered as correct, so no action has to be done in the Register … if the Standards WG agrees on it ing units 17 remain 1 - 24 units with more than 100 employees elsewhere classified: they are being checked one by one trying to confirm the activity of manufacturing car parts in the hope that relevant information on the product characteristics and intended use are available from Annual Reports and corporate websites the activity classification of such units has to be confirmed or modified accordingly - 93 units with less than 100 employees are left a methodology to move them to the most appropriate NACE class should be found; PRODCOM data alone can’t solve the problem because code 22. 29. 91. 60 refers to all land vehicles and not only to motor vehicles 7 The NACE classification and the “intended use” principle: the case of enterprises which produce plastic parts and accessories exclusively to serve the automotive industry F. Alonzi & A. Speranza – Standards WG meeting – Luxembourg 4 th June 2019

3. Conclusions and open issues Italy invites the Standards WG to discuss the following issues. 1. How other Member States classify enterprises which produce plastic parts and accessories exclusively to serve the automotive industry. 2. The need to better clarify the “intended use” principle and the burden between intermediate products and parts in the current NACE as well as to make proposals for clear and consistent rules in the future version of the classification taking into account that the question has to be clarified also at the ISIC level. See for example proposal number 53 of the first NACE Review TF consultation (Divisions 01 -25). Code: 23. 12 - Shaping and processing of flat glass In the glass sector, vehicle mirrors are classified in NACE 23. 12 (Shaping and processing of flat Proposal: glass) under product code 23. 12. 13. But over the years technology has evolved a lot. Mirrors are equipped with multiple functions and manufacturers themselves would like these items to be brought closer to the Manufacture of parts and accessories for motor vehicles (Gr. 29. 3). 3. 8 The need to revise links between NACE and PRODCOM as far as this issue concerns. The NACE classification and the “intended use” principle: the case of enterprises which produce plastic parts and accessories exclusively to serve the automotive industry F. Alonzi & A. Speranza – Standards WG meeting – Luxembourg 4 th June 2019

Francesca ALONZI – alonzi@istat. it Arianna SPERANZA – arsperan@istat. it Thank you 9 The NACE classification and the “intended use” principle: the case of enterprises which produce plastic parts and accessories exclusively to serve the automotive industry F. Alonzi & A. Speranza – Standards WG meeting – Luxembourg 4 th June 2019