The international audit, tax, and advisory firm of KPMG has recently released its 2008 Competitive Alternatives study, which provides an independent comparison of international business location costs in more than 100 cities in 10 countries around the globe.
According to the report, all of the developed countries have lost ground relative to the United States, which ranks third this year, in terms of business operating costs because of the weakening of the U.S. dollar. The Netherlands, Italy, Germany, and the UK have seen the greatest increase in costs relative to the United States, with France having the lowest cost structure of the European nations — just 3.6 percent above the U.S. benchmark. Within Europe, however, there is strong evidence of intra-regional competitiveness, according to Mark MacDonald, Global Director of KPMG’s Competitive Alternatives.
In years past, Canada and Australia had benefited from a much higher U.S. dollar. They now rank second and fourth, respectively, with business costs essentially equivalent to those in the United States. Mexico, which is new to the study, is now the cheapest place to do business, with costs approximately 20.5 percent below the U.S. baseline.
Among the major cities studied in North America, the Mexican cities of Puebla, Guadalajara, and Monterrey offer the lowest business costs, followed by San Juan, Puerto Rico. These cities all rank ahead of a group of Southern U.S. cities that offer “moderately low business costs,” including Atlanta, Tampa, and Dallas-Fort Worth.
This year’s study measured 27 cost components that are most likely to vary by location, including labor, taxes, real estate, and utilities. A variety of non-cost competitiveness factors that influence the attractiveness of business locations were also evaluated for the first time this year.
“Selecting the most favorable business location doesn’t always come down to merely dollars and cents,” said Glenn Mair, MMK Consulting, of the study authors in association with KPMG. “One of the key reasons non-cost factors were included in this study is that factors such as education, skilled labor pool, and cost of housing, for example, may play a key role in the success of a business.”
You may view the entire study at www.competitivealternatives.com.
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