Electrical Wholesaling's annual Regional Factbook has provided sales estimates for electrical distributors since 1981. That was the year the U.S. Department of Commerce stopped publishing data on our industry in its Monthly Wholesale Trade Report. Since then, we have used the Census of Wholesale Trade as a benchmark. Taken every five years, the census counts all companies in a trade, and the government requires all to answer. (With mandatory responses, the government gets a level of detail that EW could never hope to pry from distributors.)

We fill in the years between the Censuses with our own annual survey. Every July the survey goes to between 3,500 and 4,000 electrical-distributor main houses (depending on the number of usable main-house addresses in our database for the Directory of Electrical Wholesale Distributors). The surveys ask distributors for their previous-year results, their predictions for the current year and their predictions for the next year. We use the percentage results and forecasts to carry forward each year from the base Census number.

If our interim survey work is on target, our calculations should be close to the "new" Census data that will be used as a starting point for the next five-year period. At each five-year comparison point, our estimates for the Census year (based on the rates of change reported to us each year) were often quite close to the Census tallies for the nation and the regions.

But, there have been some difficulties in using the Census of Wholesale Trade as a benchmark. For instance, over the years the Bureau of the Census has dropped and added back certain classifications of distributors. Another difficulty centers on the government classification of electrical wholesalers - it is certainly broader than industry usage. The government threw in yet another monkey wrench with its change in the definition of an electrical wholesaler in the 1997 Census.

Using the North American Industry Classification System (NAICS), which was recently developed by the United States, Canada and Mexico, a company is now classified as "wholesale" (rather than "retail") based on the manner in which it does business. Formerly, companies had been classified based on the classes of customers they sold to. Although the change may appear relatively minor, for our purposes, it's huge - it means the 1997 data cannot be compared to data from previous Censuses.

Under NAICS, companies formerly classified as wholesale electrical distributors are now under two categories: wholesale and retail. In some cases the new 1997 "wholesale" numbers were half what they had been under the old method. Although many distributors may have moved away from a strict wholesale orientation, they have not gone over to the retailer camp. If anything, they've moved to a more all-encompassing "distributor" stance, using any business strategy that works.

The new classification system and its out-of-synch definition result in Census sales data for 1997 that is supposed to define the parameters for the electrical distribution industry. Instead, it seems highly questionable.

To pull together data for our sales estimates that maintained consistency with past data and definitions, I used comparative statistics for NAICS and SIC (Standard Industrial Classification, the previous system) published by the government. These statistics are given at the national level only, but they were available for merchant wholesalers (not the overall category that included manufacturers' sales offices and independent manufacturers' representatives). Assuming all companies reclassified as retail were merchant wholesaler types (not reps or sales offices), we added those numbers to the published NAICS merchant wholesaler figure to arrive at the following numbers that approximate our industry in 1997:

Establishments Sales 421610 with "retailers" 14,918 $61,702,888,000 added back

This number seemed more in line with our MPG 1997 figure of $67,286,400,000, which was arrived at by moving the 1992 Census total forward by the rate of change in sales found from our annual surveys. The 1997 Census of Wholesale Trade, using the NAICS definitions, had reported industry sales at $38,350,174,000. By comparison, the previous Census, taken five years earlier in 1992 and using the SIC definitions, showed industry sales at $42,671,554,000.

At the national level, the reported data led us to a reasonable sales number; unfortunately, no such comparative data was given for states, metropolitan areas or counties. To arrive at new 1997 sales levels for these areas, we used the one point of consistency between data for 1997 and the 1992 Census: the percent of the nation's sales that each state represented. With those percentages and the NAICS 421610 sales figures for the states and nation, we estimated each unreported state, then proportionately increased each state's 1997 Census number so the total of all 50 reached the target total of $61.7 billion. This gave new estimates for 1997 that worked off the old base.

Looking at all metropolitan areas for which there were sales totals from the 1997 Census, we converted them to the new basis by finding the percent the metropolitan statistical area (MSA) sales represented of the original 1997 state total, then applying that percent to the new state total. In cases where a metropolitan area's sales were not reported in 1997 but had been in 1992, we used the 1992 percent.

This logical and reasonable process allowed us to make the best of a bad situation, and it results in the sales data you see reported in the Regional Factbook. More than ever, however, we must add the caveat "estimates only." Data users should take into account the "tentative" nature of the sales data we present now that it's based on NAICS.