Globally, Canada is one of the most cost competitive places to do business
TORONTO, March 22, 2012 /CNW/ - Moncton is ranked as the most cost competitive city for business in the country, according to KPMG's Competitive Alternatives 2012 study. The east coast city was found to be more cost competitive than 15 other cities including Toronto, Montréal, Calgary and Vancouver. The KPMG study examines 26 significant business cost elements, including labour, taxes, real estate, and utilities, in 16 featured Canadian cities, and compares more than 110 cities in 14 countries around the world.
Among other major Canadian cities:
- Toronto ranks 12th among the 16 featured Canadian cities. Moderate industrial leasing costs, transportation costs and natural gas costs are advantages for Toronto relative to the other Canadian cities, while high labour costs add to the total cost picture in Toronto.
- Montréal ranks 7th among the 16 featured Canadian cities, and has the lowest business costs among the 30 largest cities in Canada and the United States (all with metro populations of 2 million or more). Low or moderate transportation costs, industrial leasing costs, and electricity costs help Montréal's performance relative to the other Canadian cities.
- Vancouver ranks 14th among the 16 featured Canadian cities. Vancouver has the highest office leasing costs among the 16 featured Canadian cities, for both downtown and suburban office space, while relatively low utility costs benefit Vancouver.
- Calgary ranks as the most expensive among the 16 featured Canadian cities, but still ranks as being more cost effective than 42 international cities studied. Relatively high wages, suburban office leasing costs, and electricity costs all add to Calgary's total cost picture, while low natural gas costs represent a plus for Calgary.
"Larger cities are more appealing for many companies to do business, but smaller regional cities clearly offer a more cost competitive location for certain types of companies," said Brad Watson, Partner, KPMG in Canada. "Our study found that business costs in smaller regional centres, like Moncton, are on average, lower than in the largest business centres in both Canada and the US."
While all Canadian cities ranked as more cost competitive than the US baseline for the study (based on New York City, Los Angeles, Chicago, and Dallas-Fort Worth), results for Canadian cities relative to their regional peers in the US were more mixed. For example:
- Montréal is less expensive to operate in and ranks ahead of Boston, Toronto ahead of Chicago, and Vancouver ahead of Seattle.
- While Windsor-Essex ranks as less expensive than Saginaw (MI) and Buffalo (NY); both Lexington (KY) and Youngstown (OH) rank ahead of Windsor-Essex with low business costs.
Rankings and cost indices for featured Canadian cities
(Listed from lowest cost to highest cost)
|City|| 2012 Cost
|City|| 2012 Cost
**Business costs in this table are expressed as an index, with the United States being assigned the baseline index of 100.0. A cost index less than 100 indicates lower costs than the US. A cost index greater than 100 indicates higher costs than the US. For example, an index number of 95.0 represents a 5.0 percent cost advantage relative to the US.
Canada vs. the Globe
Among the nine mature markets studied, Canada ranks third for business costs, with costs 5.0 percent lower than in the US. While the United Kingdom and the Netherlands rank only marginally ahead of Canada (by 0.5 and 0.3 percentage points, respectively), the favourable results for these countries are due, in part, to devaluations of the euro and the pound resulting from the European debt crisis.
"Canada continues to be a competitive place to do business," said Elio Luongo, Canadian Managing Partner, Tax. "Despite Canada's sluggish productivity rates, our cost position did not change from our previous study in 2010, and that tells us that through the current global economic turbulence, and despite the strong loonie, we are standing our ground."
Rankings and cost indices for featured countries
(Listed from lowest cost to highest cost)
|Country|| 2012 Cost
| % cost
|High Growth Market|
High Growth Markets
The 2012 edition is the first edition of KPMG's Competitive Alternatives study to examine the major high growth countries and compare cost competitiveness in Brazil, Russia, India, China and Mexico.
The study found that China and India are low cost leaders among high growth countries with overall business costs significantly below the US baseline. Low cost labour drives the cost advantage for India and China, with wages being substantially lower than in Canada. While labour costs vary greatly between the high growth and mature markets, many other business cost factors in the mature countries are similar to, or higher than, those of mature countries. For example, only India offers industrial facility leasing costs lower than Canada and the US, while utility costs in India and China are also higher than in Canada or the US. High tax burdens, particularly for indirect taxes, also offset labour cost savings in a number of the high growth markets.
Despite a surge of interest from many companies in serving Brazil's large and growing domestic market, costs in Brazil are higher than in the other high growth countries and approach the cost levels of the leading mature countries. Brazil's wage levels, including minimum wage standards, are significantly above those of the other high growth countries studied, and a heavy tax burden also impacts Brazil's total cost performance.
About KPMG's Competitive Alternatives Study
KPMG's Competitive Alternatives 2012 study provides an independent comparison of international business locations in more than 110 cities in 14 countries around the world.
The study looks at a wide range of issues when assessing competitiveness for business with a primary focus on business costs, but also population and demographics, education and skilled labour, innovation, infrastructure, economic conditions, regulatory environment, cost of living, and personal quality of life. It also examines cost competitiveness of locations for different industry sectors including manufacturing, digital, research & development, and corporate services.
The study enables businesse executives to take an initial scan of how business costs compare among a variety of cities in leading countries. It also assists KPMG professionals and economic developers in their work with businesses considering relocation or expansion, and enables policy makers to help determine the impact of a proposed tax and/or incentive policy change on the cost competitiveness of their jurisdictions.
To access the full report, please visit www.competitivealternatives.com.
Exchange rates per USD used in the Competitive Alternatives 2012 study are as follows: AUD $0.99, BRL $1.80, CAD $1.02, CNY ¥6.36, EUR €0.74, GBP £0.64, INR 50.75, JPY ¥77.33, MXP $13.64 and RUB 31.07.
KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative ("KPMG International"). KPMG member firms around the world have 145,000 professionals, in 152 countries.
The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such. Follow @KPMG_Canada for more facts from the Competitive Alternatives 2012 study.
Video with caption: "Video: Highlights of KPMG's Competitive Alternatives 2012 study featuring KPMG partners, Elio Luongo (tax) and Brad Watson (global infrastructure).". Video available at: http://stream1.newswire.ca/cgi-bin/playback.cgi?file=20120322_C6047_VIDEO_EN_11373.mp4&posterurl=http://photos.newswire.ca/images/20120322_C6047_PHOTO_EN_11373.jpg&clientName=KPMG%20LLP&caption=Video%3A%20Highlights%20of%20KPMG%27s%20Competitive%20Alternatives%202012%20study%20featuring%20KPMG%20partners%2C%20Elio%20Luongo%20%28tax%29%20and%20Brad%20Watson%20%28global%20infrastructure%29%2E&title=KPMG%20LLP%20%2D%20Highlights%20of%20KPMG%27s%20Competitive%20Alternatives%202012&headline=Moncton%20leads%20the%20pack%20as%20most%20cost%20competitive%20city%20for%20business%20in%20Canada
Image with caption: "What makes up these numbers? KPMG'S Competitive Alternatives 2012 study overall cost results by country. (CNW Group/KPMG LLP)". Image available at: http://photos.newswire.ca/images/download/20120322_C6047_PHOTO_EN_11331.jpg
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