The Canadian Advantage

A study done by the consulting firm KPMG ranks Canada #1 in the G-7 for having the lowest costs of doing business.

The study compares the major cost factors that influence investment decisions in nine industry sectors in North America, Japan and Europe.

Canada leads all the countries studied in important cost components such as labour and electricity and features the lowest overall cost in eight of the nine industries studied.

Canada came first in electronics, medical devices, metal fabrication, pharmaceuticals, plastic products, telecommunications equipment, packaged software, and advanced software, and is a close second in food processing.

It also showed that overall, Canadian locations have a 7.8 percent cost advantage over comparative locations in the United States.

And each of the 25 Canadian cities in the study show lower costs of operating a comparable business than all of the U.S. cities studied.

Any business leader thinking about expansion -- especially in the North American market -- should take a serious look at this report. It provides hard facts to show there are clear cost advantages to setting up or expanding an international business in Canada.

Key Highlights

Of the 29 cities compared in Eastern North America the top 16 were Canadian -- with Sherbrooke, Quebec at #1. Quebec City and Montreal were also in the top 10.

Atlantic Canada had a strong showing, scoring 4 of the top 7 cities in Eastern North America -- St. John's, Charlottetown, Halifax, and Moncton.

Ontario placed 9 cities in the top 16 -- Sarnia, Kingston, Ottawa, London, Kitchener, Hamilton, Windsor, Mississauga, and Toronto.

Of the 11 cities compared in Western North America, Canada took the top 6 positions -- with Regina ranking #1. Edmonton, Saskatoon, Brandon, Calgary, and Winnipeg ranked 2 through 6.

Of the 6 cities compared in Pacific North America, Canada took the top 3 spots -- with Kelowna ranking #1. Kamloops and Vancouver ranked 2 and 3 respectively.

Canada's overall labour costs are the lowest in all of the countries studied. Compared with the United States, for example, the cost of Canadian labour is 32 percent less.

Canada offers the most cost-competitive locations for technology - and capital-intensive industries.

In manufacturing, Canada has a 7 percent advantage over the United States.

In the software industries, the Canadian cost advantage is 14.3 percent. (On this basis, running a 110-employee software firm in Canada instead of the United States will save the average company about US$1.6 million a year.)

Canada has a clear cost advantage in business sectors requiring a highly skilled labour force or where research and development constitutes a significant part of business.