US Seventh in Business Cost Poll

January 29, 2002 ( - Germany and Japan are the priciest places in which to do business while Canada has the lowest corporate costs, a new study shows. The US came in seventh in the poll.

KPMG LLP’s survey of business costs in nine industrial countries also showed that Italy has been the most active business cost-cutter for legally required employee benefits, according to a company press release.

KPMG’s study, entitled Competitive Alternatives, measured 27 components such as labor, taxes, and utility costs applied to business operations in Austria, France, Italy, Germany, the Netherlands, U.K., Canada, US, and Japan.

According to the study, labor and taxes are the two most significant cost factors with labor representing 59% of location-sensitive costs for manufacturing operations and 76% to 83% for service operations.

Taxes represent the second most significant location sensitive cost, at 14% for manufacturing operations, and 4% to 11 % for service operations.

Other survey results include that:

  • The US is most cost-competitive in providing corporate services, where it ranks fourth among the nine countries, due to relatively low clerical and administrative salaries. The US’ position fell from third when KPMG last did the survey in 1999. The reasons: Appreciation of the US dollar and relatively high tech and professional salaries.
  • The United Kingdom (86.9) is the lowest-cost country in Europe, and has the lowest costs among all countries for five of the seven manufacturing operations examined.  The UK’s cost advantage over the continental European countries reaches up to 20 %, depending on the country and operation being compared.

The research includes an analysis of these costs in 86 cities across those nine countries. The study’s basis for comparison is the after-tax cost of startup and operation for 12 specific types of business, over a 10-year time span.

The analysis is based on cost information collected primarily between June and November 2001. Taxes reflect tax rates in effect on Jan. 1, 2002.

Read more about the study at