KPMG: Providence fares well <br> in global business-cost survey

TORONTO – Providence “has a lower cost base than either Hartford or Boston, despite its location less than 90 miles from both of these cities,” according to a KPMG special report on international business costs.
The “Competitive Alternatives 2008 Special Report” was compiled by Canada-based KPMG LLC, a member firm of the KPMG International network, based on cost data collected between July 2007 and January 2008. It compares 102 cities in 10 nations – including 35 major cities with populations of 2 million or more – against baseline results for the United States.
“The study measures the combined impact of 27 significant cost components that are most likely to vary by location, as applied to 17 different business operations,” the authors wrote.
The report also compares a “variety of non-cost factors that can also influence the attractiveness of locations to business,” such as the availability of a skilled labor force, as well as “economic conditions and markets, innovation, infrastructure and the regulatory environment, as well as personal factors, such as cost of living and quality of life.”
Providence had an overall score of 101.9 points – or 1.9 percent higher than the U.S. baseline of 100 points – compared with Hartford’s 104.1 points and Boston’s 106.7. Business costs in Rhode Island’s capital city were about the same as in Manchester, N.H. (101.0), although businesses here faced higher expenses than in Burlington, Vt. (99.4), and Bangor, Maine (97.5).
Providence also compared favorably with much of the study’s broadly-defined “Northeast” – including New York (109.2), Trenton, N.J., and Detroit (tied at 106.8), Philadelphia (103.2), and Saginaw, Mich. (102.2) – as well as the Pacific region, led by Honolulu (115) and Anchorage (112.6); and many cities in the Midwest.
Rhode Island, meanwhile, ranked No. 5 among states and regions worldwide for research and development expenditures.
The study’s ranking evaluated R&D spending as a percentage of gross domestic product (GDP). No. 1 on the list was New Mexico, where R&D spending amounts to 8.04 percent of GDP. Next were Maryland (6.22 percent), Massachusetts (5.11 percent), Michigan (4.56 percent) and Rhode Island (4.40 percent).
Filling out the top 10 regions for R&D spending were Connecticut and Washington, tied at 4.32 percent of GDP; California (3.92 percent); and the Midi-Pyrénées region of France (3.72 percent).

Among the largest cities in the study, taxes were highest in Paris, followed by Naples, Frankfurt, London and Yokohama. Cheapest was San Juan, in the U.S. commonwealth of Puerto Rico, where taxes are less than a quarter of those in Paris. “Most of the low tax cities are found in Mexico, the U.S. or Canada. The exceptions are the Australian cities of Melbourne and Sydney,” the report said.
Among nations examined, Mexico had the lowest costs, with a 20.5-percent business cost advantage compared with the U.S. baseline. “This rating reflects Mexico’s status as the first emerging industrialized country to be included in Competitive Alternatives: Focus on Tax,” the study authors wrote.
Canada, with a 0.6-percent cost advantage; the United States; and Australia, at a 0.2-percent cost disadvantage were the leaders among the nine established industrial nations. “Business costs in these three countries are virtually equivalent, with less than 1 percent separating these countries,” the authors said.
France was next, at No. 5, with a cost disadvantage of 3.6 percent compared with the United States. Next were the closely-grouped United Kingdom, the Netherlands and Italy, “with business costs between 7.1 and 7.9 percent above the U.S. benchmark.”
Last among the 10 nations studied were Japan and Germany, “with costs 14.3 and 16.8 percent (respectively) higher than the United States.”
The study Web site allows users to search for cities around the world that meet their criteria, specifying a range of population size; a country or continent; the presence of a given major industry or industries; or major employers, by company or industry; airport access; and port or non-port cities.
Switzerland-based KPMG International describes itself as a global network of firms – with more than 123,000 professionals in more than 140 countries – providing audit, tax and business advisory services. The cooperative has been ranked by Forbes magazine among the nation’s 100 best places to work; KPMG’s Providence office was ranked among the 2008 Best Places to Work in Rhode Island by Providence Business News and Best Companies Group. (READ MORE) Additional information is available at kmpg.com.
The full “Competitive Alternatives 2008 Special Report: Focus on Tax” is available from Canada-based KPMG LLP at www.CompetitiveAlternatives.com.