KPMG Study Shows Canada and Waterloo Region Retaining Cost Competitiveness

Waterloo Region - Canadian locations – including Waterloo Region – have retained their overall level of competitiveness against the average of a range of US locations, according to the new Competitive Alternatives Study,released today by KPMG. This competitiveness has been sustained in the face of marked weakness in the US dollar since the previous survey two years ago.

The weakening US dollar against all currencies has been the major factor influencing results since the last analysis in 2006. Canada – including Waterloo Region – has seen erosion of previous cost advantages vis a vis the US over the intervening two years, but during the same period there have been competitive gains over European countries.

Costs for Waterloo Region, known for over 20 years as Canada’s Technology Triangle, are fifth lowest among the 20 principal cities in the North American Northeast surveyed by KPMG. Overall, business costs in Waterloo Region are just under the average in the US.

"The results indicate that cost levels here have been contained and even reduced, mitigating the effect of the rise of the Canadian dollar in relation to its US counterpart,” says John Tennant, Chief Executive Officer of Canada’s Technology Triangle Inc, one of the study’s sponsors.

“But cost is not always the main or even the principal consideration, as is acknowledged by the KPMG commentary about the influence of non-cost factors.

“Increasingly, we have seen that the competitiveness of Canada’s Technology Triangle is driven by the ability of companies to access outstanding talent and benefit from Waterloo Region’s proven technological adaptability. These factors apply across the board to manufacturing, service and high technology companies.”

Research and development remains an area of notable advantage for Canada, Ontario and Waterloo Region in light of favourable R&D tax incentives. Canada’s Technology Triangle attracts special interest on the part of prospective investors because of the research and training excellence at its outstanding institutions of higher learning. CTT Inc’s Tennant stresses, “Waterloo Region post-secondary institutions know how to partner with business. In doing so, businesses can also gain advantage by levering the significant research funding that the Canadian and Ontario Governments provide to universities and colleges.”

The higher costs in Europe as reported by KPMG have validated the emphasis which Canada’s Technology Triangle Inc has given to investment attraction from continental Europe, especially Germany. Germany comes out in the KPMG survey as the highest cost country.

“Overall costs in Frankfurt, for example, are on average over 22 percent more than Waterloo Region,” points out Bill Elliot, Director of Business Development for Canada’s Technology Triangle Inc. “This advantage has helped in attracting German manufacturing North American operations to locate here.”

The qualities that attract leading edge companies are attested to in the City of Waterloo’s selection as the Intelligent Community of the Year. In addition, Canada’s Technology Triangle has won independent recognition as an especially attractive location for new businesses.

In May 2007, Waterloo Region garnered a Top 5 ranking in its population grouping in the “North American Cities of the Future” listing by fDimagazine, part of the Financial Times Group of London, UK. Later, last August, Waterloo Region was named one of Canada’s Top Metro areas in the first-ever rankings of the top spots in Canada for construction investment by Site Selection magazine.

The 2008 KPMG Competitive Alternatives Study,the seventh since it was inaugurated in the 1990s, ranks the competitive business cost advantage of 136 cities in 10 countries: Australia, Canada, France, Italy, Japan, Germany, Mexico, the Netherlands, the United Kingdom and 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. Over 2,000 individual business scenarios were examined, combining more than 50,000 items of data. The basis for the cost comparison is the after-tax cost of startup and operation, over a 10-year planning horizon.

The KPMG Competitive Alternatives Studycan be accessed at www.competivealternatives.com.