Mexico and Canada offer the most competitive combination of costs for facilities, utilities, tax, transportation and labour among 10 countries recently surveyed for their amenability to international business. Meanwhile, their NAFTA partner, the United States, is ranked 10th in KPMG’s 2016 Competitive Alternatives study as the surging U.S. dollar drives costs upward.
The biennial analysis pegs the five categories of business costs against a baseline derived from average costs in the four largest U.S. metropolises of New York, Los Angeles, Chicago and Dallas-Fort Worth. Nine countries now record wider gaps from the baseline than in 2014, with Germany moving from least competitive in 2014 to eighth this year.
Mexico, Canada and the Netherlands retain their 2014 status, ranked first, second and third for competitiveness. Italy, Australia, France, the United Kingdom, Germany, Japan and the U.S. follow in sequence.
While Mexico has the lowest costs for labour, natural gas, downtown office space and industrial land and construction, it does not rank in the top four for effective corporate tax rates. In contrast, Canada cracks the top four in 12 of 14 categories — with property tax and industrial land the only outliers.
Canada also ranks first in three categories with the lowest costs for industrial lease space, electricity and the corporate taxes on digital services. Canadian labour costs are the second lowest after Mexico’s, as is the cost of downtown office space.
Montreal, Toronto and Vancouver similarly reflect Canadian business cost competitiveness, ranking third, fourth and fifth among 29 international cities. The Mexican cities of Monterrey and Mexico top the list. Manchester, U.K. is the highest ranked European city at sixth, while Atlanta is the highest ranked U.S. city at 18th.
Although Los Angeles and New York factor into the survey’s baseline, their individual business costs exceed the baseline. New York takes the title as most expensive city.