City great place to do business

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(WINNIPEG FREE PRESS)

Winnipeg gets bragging rights for another two years as the lowest-cost place to do business in Western Canada and all of the midwestern United States.

The 2010 version of KPMG's study on global competitiveness, called Competitive Alternatives, ranks Winnipeg No. 1 among 22 cities in this region when it comes to business costs.

The study, released Tuesday, ranks 112 cities in 10 countries. It puts Canada second of the 10 countries studied, (Mexico, the only developing country in the study, was No. 1), five per cent less expensive than the United States.

When the study was last produced two years ago, Canada and the United States were virtually tied.

KPMG analysts said more favourable exchange rates (when the study was done at the beginning of the year) and increasingly lower corporate tax rates across Canada over the last two years were among the reasons Canada comes out more cost competitive now.

Winnipeg's ranking has not changed dramatically. In 2008 it was slightly more expensive than Saskatoon. This year Winnipeg edged out Saskatoon.

The study measured 26 significant cost components that are most likely to vary by location, including labour, taxes, real estate and utilities as they apply to 17 business operations over a 10-year planning horizon as well as a range of non-cost competitive factors.

Greg Dandewich, vice-president of Destination Winnipeg, the agency responsible for the city's economic development, said KPMG's report is eagerly anticipated and is useful in the city's efforts to attract business to the city.

"We come out extremely well," Dandewich said. "It's very helpful. One of the things we need to do is to give companies a snapshot of where we fit in. When you are dealing with opportunities to attract investment, you use it as a door opener."

Dandewich said the study does not include all of the intangibles that businesses would look at, but it is valuable in that it compares the same metrics in every city across the board.

And in that context, Dandewich said Winnipeg looks great, scoring between 4.2 and 5.7 percentage points ahead of every one of the midwestern U.S. cities.

As a regular subscriber to the study (cities have to pay to be included), Dandewich noted that Winnipeg's cost ranking in the region has gone from fifth to first in aerospace manufacturing and third to first in electronic assembly.

Considering that the largest cities in the countries surveyed are the most expensive ones in their respective countries, cost competitiveness is clearly not always the most important consideration for companies.

But Simon Harding, project leader on the KPMG report, said, "Given that the global economy has been through a recession, I would argue that it is now more important than ever for companies to look at costs when thinking about having international locations or moving into a new market."

The Winnipeg Chamber of Commerce is spearheading an initiative called Selling Winnipeg to the World, where it is using community contacts to approach businesses that might establish a presence in the city.

Bill Morrissey, the chamber vice-president in charge of the efforts, said the results of the KPMG study will be a great marketing tool.

"Companies are looking at taking action on both the revenue and cost sides of the ledger," he said. "For us to have the distinction of having very competitive overall costs of running a business, it definitely bodes well for us."

martin.cash@freepress.mb.ca

1. Winnipeg

2. Saskatoon, Sask.

3. McAllen, Texas

4. Cheyenne, Wyo.

5. Sioux Falls, S.D.

6. Oklahoma City, Okla.

7. Edmonton, Alta.

8. Billings, Mont.

9. Fargo, N.D.

10. Omaha, Neb.

11. Cedar Rapids, Iowa

12. Wichita, Kan.

13. Salt Lake City, Utah

14. Dallas-Fort Worth, Texas

15. St. Louis, Mo.

16. Milwaukee, Wis.

17. Houston, Texas

18. Phoenix, Ariz.

19. Albuquerque, N.M.

20. Chicago, Ill.

21. Minneapolis, Minn.

22. Denver, Colo.

Republished from the Winnipeg Free Press print edition March 31, 2010 B9