When it comes to the cost of doing business, Vancouver is one of the top-ranked major cities among mature markets around the world.
This finding comes from the 2016 Competitive Alternatives study, conducted every two years by professional services firm KPMG. The study compares 26 business costs including labour, real estate, transportation and utilities, as well as other competitiveness factors including taxes and incentives. Rankings are established among 111 cities in North America, Europe, Japan and Australia.
Within the subset of 29 major cities in the study, Vancouver was the third least expensive city in the world’s mature market countries, right after Montréal and Toronto. Monterrey and Mexico City were also ranked ahead of Vancouver in this 29-city group, although Mexico was the only country in the study considered to have the cost advantages of an emerging market economy.
Substantial gain in competitiveness
Each city’s costs are compared to a U.S. baseline that reflects average business costs for the four largest U.S. cities: New York, Los Angeles, Chicago and Dallas-Fort Worth. Since the last edition of the study was published in 2014, Vancouver’s cost advantage compared to the U.S. baseline strengthened from 5.4 per cent to 13.8 per cent across all sectors. This substantial gain in competitiveness is mainly due to the low current value of the Canadian dollar versus the U.S. dollar.
However, Vancouver has also benefited from the second-lowest increase in total labour costs among the Canadian cities studied, as well as an impressive decline in transportation costs. In a Pacific US/Canada regional view, only Kelowna edged out Vancouver for least expensive business costs. Vancouver ranked well ahead of all US cities studied, including Seattle, Portland, San Francisco, Los Angeles and San Diego.
Canada a perennial top performer
Among the 10 countries in the 2016 study, Canada finished second only to Mexico. While Canada’s cost competitiveness has a lot to do with the surging value of the U.S. dollar, our country continues to be more competitive than others with depressed currencies such as Australia, France, Germany and Italy.
Canada is a perennial top performer in this study. In the 2016 edition, Canada ranked second in all four sectors examined: digital services, R&D services, corporate services and manufacturing. Vancouver posted its best results in manufacturing for industries with significant export orientation, clearly making the most of its coastal location and world-class port facilities. Such strengths are helping to make Vancouver highly competitive in the race to attract new and relocating global businesses.
By: Walter Pela, Partner-in-Charge, GVA Tax, KPMG in Canada