In this edition: Special Industry Classification Procedures apply to California Electronic Product Manufacturing Classifications.
Effective January 1, 2014, the USRP at Part 3, Standard Classification System, Section IV, Special Industry Classification Procedures, was amended to add Rule 3, Electronic Products Design and Manufacturing. This rule is applicable only to the 16 classifications listed in the Electronics Industry Group. The rule addresses the common electronics industry practice of designing proprietary electronic products while subcontracting the actual manufacturing of the products to separate concerns.
3. Electronic Products Design and Manufacturing
The Electronics Industry Group includes a list of classifications that apply to employers engaged in the manufacture of electronic and electrical products. These classifications contemplate manufacturing operations whether performed in connection with the employer's proprietary products or performed on a contract basis for other concerns.
Employers that design the proprietary product, but subcontract the manufacture to other concerns, shall be assigned to the appropriate Electronics Industry Group manufacturing classification provided the following functions are performed:
Employers that neither design nor manufacture the product, but purchase products from manufacturers for resale purposes, shall be assigned to the appropriate Stores classification notwithstanding that they may engage in some product preparation or quality control operations.
California electronic product design companies commonly utilize local or overseas contract manufacturers to produce their products. As indicated in Rule 3, if the employer designs the proprietary electronic product(s) that is described by a classification contained in the Electronics Industry Group, it will qualify for assignment to the applicable manufacturing classification. Employers that purchase and resell electronic products that are designed by others are not assignable to a manufacturing classification but are assigned to the appropriate Stores classification.