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Low costs give city an economic advantage

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Winnipeg has been ranked as the most cost-competitive city in North America's midwest.

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Winnipeg has been ranked as the most cost-competitive city in North America's midwest. Photo Store

Once again, Winnipeg has been ranked as the most cost-competitive city in Western Canada and the U.S. Midwest in KPMG's Competitive Alternatives report.

The survey, done every two years, compares costs for 19 industry-specific business operations, seven in the services sector and 12 in the manufacturing sector. Overall results are based on the average of costs expressed as an index number.

Among other things, Winnipeg was ranked as having the lowest costs for biomedical research among cities highlighted for their prominent or emerging research and development clusters. It had the lowest index rating in digital services, R&D and manufacturing and was second-lowest in corporate services.

Winnipeg beat out Saskatoon, Cedar Rapids, Iowa, Omaha, Neb., and Sioux Falls, S.D., among 26 cities in the region, all of which had costs that are more than five per cent lower than the U.S. baseline. Chicago, Denver, Minneapolis and Houston were the least cost-competitive in the region.

Winnipeg was ranked as the 10th-lowest among all 107 cities included in the ranking and seventh of 15 Canadian cities.

Moncton was the overall lowest-cost Canadian city and Vancouver the least cost-competitive.

The ranking is significant in that it is third-party validation for the kind of economic advantages local promoters would like to tout.

At the same time, it is not a game-changer that will attract a groundswell of new businesses.

"You don't want to be most expensive, but I don't think simply being lowest is enough to make a company relocate here," said Tracey Maconachie, CEO of the Life Sciences Association of Manitoba.

Economic development officials say the ranking probably has a more powerful impact when it comes to retaining businesses.

Greg Dandewich, vice-president in charge of the economy for Economic Development Winnipeg, said "Sometimes local companies don't always recognize how competitive the marketplace is. This paints the picture for them. On the business-attraction side, we have to work hard as a community to make sure we build up awareness externally, where some of our competitive advantages lie."

EDW and the province co-sponsor Winnipeg's inclusion in the study and Dandewich said it is "a very functional tool" when explaining the lay of the land to businesses interested in investing here.

"When we're doing an overview of the competitive advantages that Winnipeg has versus other jurisdictions, we have something ready in hand," he said. "It's detailed and allows us to say with third-party validation -- it's not EDW saying this -- that we are the most cost-effective community in this region of North America based on worldwide analysis from a reputable firm like KPMG."

It's also very current, reflecting dynamics in the global economy happening today. For example, digital services is a sector whose services are in demand everywhere.

As it turns out, software development is one of the most in-demand positions in the province. Kathy Knight, head of the local information and communications technology association, said it's an area where there is some bench strength here.

"We do have an opportunity to attract more companies here interested in that type of talent, but it also can mean more interesting work for folks already doing that work here."

The province's generous 40 per cent labour cost tax credit in the digital media space on projects of up to $500,000 is an attractive feature. It's also increasingly well-known wage levels are typically not at the top of the scale in Winnipeg.

Knight said she recently took a call from a counterpart in Montreal who made it clear it was a competitive advantage the Manitoba market enjoyed.

martin.cash@freepress.mb.ca

 

Republished from the Winnipeg Free Press print edition March 28, 2014 B6

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