U.S. Leaps Over Europe As a Cost-Effective Business Cost Location, Says KPMG Report

Toronto, Canada (ots/PRNewswire) -

- Europe, Australia, and Canada Lose Ground Because of Lower U.S.
Dollar

- Attn: Business Editors and Reporters

TORONTO, Canada, March 27 /PRNewswire/ --

All of the developed countries have lost ground relative to the
United States in terms of business operating costs, due to the
dramatic weakening of the U.S. dollar. However, it is the
Netherlands, Italy, Germany, and the United Kingdom that have seen
the greatest increases in costs relative to the U.S., according to
KPMG's 2008 Competitive Alternatives study that compares business
costs in 136 cities in 10 countries in North America, Europe, and
Asia Pacific.

In Europe, the U.K. has benefited somewhat at the expense of
continental Europe from the stronger appreciation that the Euro has
seen relative to the Pound. France has the lowest cost structure of
the European countries, with costs only 3.6 percent above the U.S.
benchmark. Canada and Australia, which in previous years had
benefited from a much higher U.S. dollar, now rank second and fourth
globally, with business costs essentially equivalent to the U.S.

Mexico, new to the study, is the cheapest place to do business,
with costs approximately 20.5 percent below the U.S. baseline. Japan
remains one of the most expensive countries in which to do business,
however, it has gained ground against other countries over the longer
term due to low inflation rates and lower volatility of the yen.

"In previous years, the UK, Netherlands, Italy, and France all
ranked lower than the U.S. benchmark, however, now the cost of
business is considerably higher in these countries due largely to the
depreciation of the U.S. dollar," said Mark MacDonald, Global
Director, Competitive Alternatives, KPMG. "However, within Europe
there is strong evidence of intra-regional competitiveness. The
opening of labor markets, more competitive tax rates, and investment
in infrastructure implies that while Europe has shifted its position
relative to the U.S., there is still strong competition among
European countries."

In Europe, costs in Paris are comparable with some large U.S.
cities, while costs in Manchester, Frankfurt, and London are all
significantly higher than in any of the North American cities
studied. London represents the most expensive city examined, by a
wide margin.

Toulouse, France-very competitive in aerospace, product testing,
and clinical trials-offers the lowest costs among the mid-sized and
large cities studied in Europe, and also offers non-cost benefits
related to France's strong environmental performance record, low
crime rates, and good access to health care. Trailing Toulouse is
Utrecht, Netherlands, which offers the lowest corporate income tax
rates for a wide range of operations, as well as excellent access to
transportation infrastructure. Paris ranks third among the mid-sized
and large European cities studied.

In North America, among the major cities studied, the Mexican
cities of Puebla, Guadalajara, and Monterrey offer the lowest
business costs, followed by San Juan, Puerto Rico. These cities rank
ahead of a group of Southern U.S. cities that all offer moderately
low business costs: Atlanta, Tampa, and Dallas-Fort Worth. At the
other end of the spectrum, San Jose, California (Silicon Valley), and
New York City continue to represent the most expensive North American
cities in which to do business.

In Asia Pacific, Adelaide has lower costs than Melbourne,
Brisbane, or Sydney, in Australia, with all of the Australian cities
being relatively affordable compared to their peers elsewhere in the
world. By contrast, in Japan, Yokohama (Metro Tokyo) has the
third-highest cost structure among the major international cities
studied, ahead of only Frankfurt and London.

This year, the study measured 27 significant cost components that
are most likely to vary by location, including labor, taxes, real
estate, and utilities, as they are applied to 17 business operations,
over a 10-year planning horizon. The study also compared data on a
variety of non-cost competiveness factors. The 6 month research
program covered 136 cities in Australia, Canada, France, Germany,
Italy, Japan, Mexico, Netherlands, the United Kingdom, and the United
States.

New to the 2008 report is analysis of a wide variety of non-cost
factors that influence the attractiveness of business and site
locations. Site selection factors compared in the report include
macro-economic indicators, labor markets, innovation, business and
environmental regulation, quality of infrastructure, energy supply,
and quality of life.

"Selecting the most favorable business location doesn't always
come down to merely dollars and cents. One of the key reasons the
non-cost factors were included in this study is that factors such as
education, skilled labor pool, and cost of housing, for example, may
play a key role in the success of a business," said Glenn Mair, MMK
Consulting, one of the study authors in association with KPMG.

Country Comparison

- Mexico ranks 1st among the countries studied, with business
costs 20.5 percent lower than in the United States. This rating
reflects Mexico's status as the first emerging industrialized country
to be included in Competitive Alternatives.

- Canada, the U.S., and Australia rank 2nd, 3rd, and 4th,
respectively, but with less than 1.0 percent separating them. The
United States has experienced the greatest gain in cost
competitiveness since 2006, improving its position significantly
against all other countries due to the depreciation of the U.S.
dollar.

- France ranks 5th among the 10 countries examined, and has the
lowest cost structure among the European countries studied.

- The United Kingdom, the Netherlands and Italy are also very
closely grouped, ranking 6th through 8th, with business costs between
7.1 and 7.9 percent above the U.S. benchmark.

- Japan is still a relatively high-cost jurisdiction, ranking
ninth overall. However, Japan has gained some ground against other
countries over the longer-term, due to its low inflation rates and
the lower volatility of the yen vis-a-vis the US dollar.

- Germany (ranked 10th) has the highest cost structure overall,
with costs 16.8 higher than the U.S. benchmark. Germany, along with
Italy and Japan, also face the additional challenge of an ageing
population, with the largest proportions of the population older than
44 and the smallest proportion under 25.

Cost-Competitiveness: 2008 and 2006 Rankings by Country

COUNTRY RANK 2008 2006 Change in Cost
Index
COST INDEX COST INDEX
Mexico 1 79.5
Canada 2 99.4 94.5 -4.9
United States 3 100.0 100.0
Australia 4 100.2 92.3 -7.9
France 5 103.6 95.6 -8.0
United Kingdom 6 107.1 98.1 -9.0
Netherlands 7 107.3 95.7 -11.6
Italy 8 107.9 97.8 -10.1
Japan 9 114.3 106.9 -7.4
Germany 10 116.8 107.4 -9.4

Business costs are expressed as an index, with the United States
being assigned the baseline index of 100.0

Source: KPMG's 2008 Competitive Alternatives Study

Currency Rates

CURRENCY RATE EXCHANGE FROM 2006
Australian Dollar AUS $1.14 per US$ +17.9 %
Canadian Dollar CA$1.00 per US$ +17.4%
Euro EUR0.68 per US$ +23.7%
Japanese Yen Yen111.27 per US$ +5.4%
Mexican Peso 10.87 per US$ -1.5%
United Kingdom Pound GBP0.50 per US$ +14.4%

Source: KPMG Competitive Alternatives 2008 Study

To access the full report, please visit
www.competitivealternatives.com.

About Competitive Alternatives

KPMG's 2008 Competitive Alternatives study provides an
independent comparison of international business location costs in
over 100 cities in 10 countries around the world. The study enables
businesses executives to take a quick, initial scan of how business
costs compare among a variety of cities in leading countries. It also
assists KPMG professionals and economic developers in their work with
businesses considering relocation, and enables policy makers to help
determine the impact of a proposed tax and/or incentive policy change
on the cost-competitiveness of their jurisdiction in relation to
others. Detailed study results are available online at
http://www.competitivealternatives.com.

About KPMG

KPMG is a global network of professional firms providing Audit,
Tax, and Advisory services. We operate in 145 countries and have more
than 123,000 professionals working in member firms around the world.
Our purpose is to turn knowledge into value for the benefit of our
clients, our people, and the capital markets. Our member firms aim to
provide clients with a globally consistent set of multidisciplinary
financial and accounting services, based on deep industry knowledge.

Our values determine how we behave, with clients and each other.
They define what we stand for and how we do things, helping us to
work together in the most effective and fulfilling way. This enables
us to create a strong organizational culture-consistently-throughout
the network.

We play an important role in the capital markets, and are highly
active in supporting positive reform within our industry to
strengthen credibility and confidence. We believe corporate social
responsibility is at the heart of all great organizations, and are
committed to making a real difference to the communities in which we
operate.

- A digital report and clips can be downloaded from
http://www.f8films.com/client/kpmgca2008

Media Contacts:
Julie Bannerjea
Senior Manager, Media Relations
KPMG in Canada
+1-416-777-3243
jbannerjea@kpmg.ca

ots Originaltext: KPMG International LLP
Im Internet recherchierbar: http://www.presseportal.de

Contact:
Media Contacts: Julie Bannerjea, Senior Manager, Media Relations,
KPMG in Canada, +1-416-777-3243, jbannerjea@kpmg.ca


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