ST. JOHN'S: THE MOST COST-EFFECTIVE BUSINESS CITY IN NORTH AMERICA AND
EUROPE.
ST. JOHN'S: THE MOST COST-EFFECTIVE BUSINESS CITY IN NORTH AMERICA AND
EUROPE.
We're Number One !
The City of St. John's was named the top city in which to do business in a report prepared by KPMG Canada. This annual report entitled "The Competitive Alternative", compares business costs in 42 cities throughout seven countries: Canada, France, Germany, Italy, Sweden, the United Kingdom and the United States.
The report analyzes the impact of eight key, location-sensitive cost factors for eight industries in 42 cities. KPMG developed business scenarios for these growth industries–electronics, food processing, medical devices, metal fabrication, pharmaceuticals, plastics, software production, telecommunications equipment–and gathered data for each industry in each location.
THE KPMG STUDY
In conducting this study, KPMG adopted a business model which assumed sales in excess of $10 million (US) per year and at least 90 employees. A 5-10 acre site in a suburban area, zoned for light to medium industrial purposes was the established facility. Using standard financial and operating assumptions, the model produced financial statements for a 10-year period; it treated each facility as a stand-alone operation. The cost comparison components of the KPMG study include the following:
INITIAL INVESTMENT COSTS - includes land purchase and construction. St. John's achieved a top ten ranking. There are ample vacant industrial and manufacturing facilities, and unserviced industrial lots are available for $1 through Newfoundland and Labrador's Economic Diversification and Growth Enterprises (EDGE) program.
LABOUR COSTS - the single most important cost factor considered. St. John's placed in the top ten. With a minimum wage rate of $5.25 an hour, labour rates are very competitive with other industrialized cities.
Transportation and distribution costs - transportation costs comprise only 3 percent of total costs for the industries modeled. The city's location between the world's two largest trading blocs necessitates transportation systems by land, sea, and air–among the most developed anywhere in the world. Overall, St. John's has competitive shipping and distribution costs.
ELECTRICITY COSTS - cities in Canada had among the lowest electricity costs. The cost in Atlantic Canadian cities–which includes St. John's with a top 15 ranking–are in line with the Canadian average. The city's power is supplied on an advanced, high-performing grid. In general, Newfoundland and Labrador has a surplus of power.
TELECOMMUNICATIONS COSTS - found to be lowest in Canada and the United States. The cities in Atlantic Canada, including St. John's, were again in line with the national average. Intense competition has resulted in low per minute rates for long distance calls and there is no charge for local calls.
TAXATION - Canada ranked third among the seven countries in the study when property tax was considered. Further, St. John's has property tax rates that are well below the Canadian average. Also, corporate income tax rates were found to be lowest in Atlantic Canada. Newfoundland and Labrador also offers the EDGE program which includes a 10- year tax holiday from variety of business taxes.
A POSITIVE REASON TO PROMOTE
In an effort to get the business message out, the Department of Industry, Trade and Technology is putting together a program to promote the results of the study. Over the course of the next few months, representatives of the department and Government in general will brief various business clients at trade shows, exhibitions and other conferences around the world. This, combined with other efforts aimed at marketing the Province as a great place to invest and start a business, should further stimulate national and international business interest.
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