Chapter 5 Producing units, products and industries

5.1    Institutional units operate in the economy and are grouped into institutional sectors. However, the production activities of institutional units can be diverse and heterogeneous with respect to the types of production processes and goods and services produced by the producing units belonging to institutional units. For analyses of production, analysts prefer to work with groups of producing units that are engaged in essentially the same kind of production. Such groups are called industries. Therefore, although institutional units can be allocated to industries, for the compilation of statistics classified by industry the units of interest are the producing units owned by institutional units. Producing units are sufficiently homogeneous, in terms of their range of activities, to enable them to be classified to industry at the required level of industry detail, based on their predominant activity.

5.2    Institutional units in their capacity as producers are described as enterprises. Enterprises can be allocated to industries in accordance with the types of productive activities in which they engage. However, as explained below, an enterprise may engage in both principal and secondary types of productive activity, and large corporations may be involved in many different kinds of productive activity simultaneously, encompassing a wide range of goods and services. Therefore, for the analysis of production classified by industry, it is necessary to partition (or split) enterprises into units that are more homogeneous in terms of the range of productive activities in which they engage. These units are described as type of activity units (TAUs) in ASNA.

5.3    The principal activity of a producing unit is the activity with value added that exceeds the value added of any other activity carried out by the same unit. In this context, activities are the kinds of production (based on outputs, inputs, production techniques or output uses) that are defined as the principal activities of each industry in the International Standard Industrial Classification (ISIC), Revision 4, published by the United Nations. A secondary activity is an activity with value added less than that of the principal activity. To be considered as either principal or secondary activities, the outputs from the activities must be goods or services that are capable of being delivered to other units even though they may be used for own consumption or for own capital formation.

5.4    The output of ancillary activity is not intended for use outside the enterprise. Ancillary activity is undertaken within an enterprise to support the principal or secondary activities. Activities which may be classified as ancillary include record keeping; electronic or other forms of communication; purchasing materials and equipment; personnel management; warehousing; transportation; sales promotion; cleaning, repairs and maintenance; security and surveillance. For national accounting purposes, the output of an ancillary activity is not explicitly recognised or recorded, and all inputs to ancillary activities are treated as inputs to the principal or secondary activities that they support. When ancillary activity grows to the point that it has the capacity to provide services outside an enterprise, it is treated as a secondary activity.