U.S. Grows Less Cost Competitive, New Research Shows

Compiled By Jill Jusko A strong dollar has made the U.S. a less cost-competitive place to do business than eight other industrialized countries, new research shows. According to a study by professional services firm KPMG LLP, Canada is the least expensive of the nine locations in which to conduct business, edging out the United Kingdom and Italy. Japan and Germany were deemed the most-expensive locations to do business, followed by the United States. The ranking of the nine countries in KPMG's 2002 Competitive Alternatives Study, from least expensive to most expensive, are: Canada, UK, Italy, Netherlands, France, Austria, U.S., Germany and Japan. In a similar study done two years ago, the U.S. was ranked the third least-expensive place to do business. KPMG's study measured 27 components, including labor, taxes and utility costs. It analyzed these costs in 86 cities across the nine countries in the study. The research's basis for comparison is the after-tax cost of start-up and operation for 12 specific types of businesses over a 10-year time span. In other highlights:

  • Canada is the lowest-cost country in seven of the 12 business types, including software, R&D, corporate services, and two manufacturing operations (electronics assembly and specialty chemicals).
  • The U.S. is most cost-competitive in providing corporate services, where it ranks fourth among the lowest-cost countries.
  • Germany is most competitive in research and development, where it has a 7% cost advantage over the United States.
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