According to a report by KPMG, Canada has improved its cost competitiveness by 10.1% since 2012

Over the past two years, Canada's cost advantage relative to the United States has widened from 7.2% to 14.6%, while Mexico has slipped out of the top three for tax competitiveness. The United States has fallen to the bottom of the list for overall cost competitiveness among the countries surveyed.

KPMG's Competitive Alternatives is a biannual comparison of business location costs across 100 cities from North America as well as leading mature market economies in Europe and Asia-Pacific. This includes Australia, Canada, France, Germany, Italy, Japan, Mexico, the Netherlands, the United Kingdom and the United States.

Rising U.S. dollar translates into lower manufacturing costs for U.S. firms with international operations

On average, currencies declined by nearly 20% relative to the U.S. Dollar, with the UK pound being the only outlier, declining by less than 10%. This has resulted in constrained U.S. competitiveness and downward pressure on the cost of doing business in all other countries when measured in U.S. dollar terms. KPMG concludes, "For US firms with international operations, this has the potential to translate into significant cost savings." As a result, the U.S. placed last among all countries surveyed for the first time since the biannual report launched in 1996.

Canada among 'top 3' lowest corporate tax rates for all four industries and 19 manufacturing sectors evaluated by KPMG

Canada is the only country outside of Europe to place in the top three of any of the four industries for corporate tax rate competitiveness, including first for digital, third for R&D, second for corporate and second for manufacturing. In fact, among 19 manufacturing sectors evaluated by KPMG, Canada was second only to Mexico in every case with the exception of green energy, in which Canada ranked the most cost competitive.

Canada first in G7 for overall business cost competitiveness

KPMG's Competitive Alternatives 2016 rated 26 individual cost factors that are likely to vary significantly by location. Those unrelated to tax were grouped into four categories: labour cost, facility cost, utility cost and transportation cost. Canada ranked in the top three of each of the four categories.

Canada offers the most competitive labour costs in G7

Canada is the best place in the world for hiring highly skilled and educated talent without breaking the bank. While Canada ranked fourth for salaries and wages, the relatively low cost of employee benefits, including healthcare, boosts Canada to second overall for labour cost competitiveness.

When comparing electricity rates by country, Canada tops G7, and even Mexico

Canada ranks first for electricity rates by country and third for the cost of natural gas. Only Mexico, at $0.56 per 100 cubic feet, and the United States -- which is one cent more competitive -- offer cheaper natural gas, according to KPMG.

Canada offers the most cost competitive industrial lease space, and ranks second overall in facility cost competitiveness

Looking to set up downtown? Canada's downtown office space is second to only Mexico's in terms of cost competitiveness, while ranking first for industrial lease and third for suburban office space.

Canada-based businesses benefit from lower product distribution costs

Only Japan bests Canada for surface and airfreight costs. In North America, the United States has 15% higher transportation costs and ranks seventh, while Mexico-based companies incur costs 60% higher than Canadian companies, landing them in last place.

Access the full report: KPMG's Competitive Alternatives 2016

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April 1, 2016

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