United Nations Statistics Division Manufacturing services in CPC

Why manufacturing services? The treatment of outsourced manufacturing activities requires a measurement of the value of the outsourced activity What does the principal produce? What does the contractor produce?

Terminology Principal = unit that enters in a contractual relationship with another unit (here called contractor) to carry out some part of the whole production process. Contractor = unit that carries out a specific production process based on a contractual relationship with a Principal. The activities performed by the contractor are denominated "on a fee or contract basis". Outsourcing = contractual agreement according to which the principal requires the contractor to carry out a specific production process.

Outputs What outputs can be recorded by the contractor? Example: Assembly of machinery The contractor uses input materials provided by the principal Value of input materials? The contractor assembles machines and turns them over to the principal, who sells them Sales value?

Outputs The contractor can usually provide information on quantities (e.g. number of machines assembled) The contractor cannot provide information on the value of the items consumed or produced He can report the value of the payment he has received for his assembly service The value of inputs and final good sold can only be provided by the Principal

Outputs In this example, the value of the assembly service and the value of the final good should not be reported in the same CPC category, i.e. not both be recorded under goods Principal: reports value of the good sold (e.g. in division 4) Contractor: reports value of his service provided (in division 88)

Structure and detail The CPC Ver.2 provides more detailed categories for these manufacturing services than previous versions. CPC Ver.2 details the manufacturing services at the level of ISIC categories in manufacturing Theoretically, the level of products (or product groups) could have been chosen

Structure and detail Not all ISIC industries (or CPC products or product groups) will be equally subject to the use of manufacturing services The CPC Ver.2 now includes 125 subclasses under the following groups:

Structure and detail Division 88 - Manufacturing services on physical inputs owned by others

Other types of services The previous examples and categories were related to services performed on physical inputs owned by others There are other types of manufacturing services that do not meet these requirements

Other types of services These services are covered in CPC Division 89

Other types of services Why are these treated separately? Input materials are not owned by principal: Printing / reproduction: Content is owned by Principal Physical input provided by Contractor (paper, CDs etc.) Output is owned by Principal

Other types of services Plastic manufacturing services (moulding etc.) and metal manufacturing services (casting, stamping) Done on specifications by Principal Input materials provided by Contractor Output owned by Principal Typically relates to intermediate products Materials recovery services No longer part of manufacturing in ISIC, but similar treatment applies Publishing on a fee basis

Division 86 Support services to agriculture, hunting, forestry, fishing, mining and utilities

Why Division 86? Similar to the services in divisions 88, these are outputs of activities related to the production of goods, where the output is not owned by the unit that carries out the activity on a fee or contract basis

Content of Division 86

Examples: For agriculture etc. often part of farmers operation, i.e. not separately accounted for – value reported is then for the good