Canada cheapest for businesses

By Julie Ziegler
Bloomberg News Service

WASHINGTON — Canada topped a survey of industrial nations as the cheapest place to conduct business, according to a study by the accounting firm KPMG LLP. Germany and Japan are the most expensive countries, the study found.

KPMG's "Competitive Alternatives" study examined 27 factors such as the size of the labor pool, cost of utilities and taxes in nine countries. The countries and their rank from least expensive to most expensive are: Canada, United Kingdom, Italy, Netherlands, France, Austria, United States, Germany and Japan, the survey said.

The United States slipped to seventh place from third place since KPMG's last report in 1999, because of appreciation of the dollar, the report said. Canada ranked first and the United Kingdom second in 1999.

The study compared the after-tax cost of a startup and the operation of 12 types of business over a 10-year span across 86 cities, KPMG said.

"Selecting the best site for a business operation requires a balanced consideration of many factors, including business costs, the business environment, personnel costs and quality of life issues," said Kerstin Nemec, a partner at KPMG's Strategic Relocation and Expansion Services.

Nemec said the major business costs affecting companies since the last survey include transportation, telecommunications and income taxes.

"We have seen a significant drop in the cost of operating a business in most countries due to changes in these areas," Nemec said.

In Europe, air freight costs dropped by more than 50 percent, while telecom costs fell by 65 to 80 percent, Nemec said.

Italy "reduced its business cost dramatically" in the past two years due to reduction in employer costs for legally mandated employee benefits, the survey said.