A location cost index overview – the title might not grab you, but the information will.
Ernst and Young (EY) conducted a location cost index study on behalf of Calgary Economic Development to compare the cost of establishing and operating a business in the Calgary region to selected North American metro areas. The index compared key variable business costs including: labour, real estate, taxes, health care, tax credits and financial incentives, utilities, and transportation costs.
Eight emerging sectors outside of the energy sector were included in the study:
• Drone manufacturing
• Food & beverage processing
• Research & development operations
• Renewable energy component manufacturing
• Communication & navigation equipment manufacturing
• Medical device manufacturing
• Distribution & logistics
• Financial services back-office operations
The results? Of the eight sectors, Calgary has the competitive advantage (placing 1st or 2nd) in all sectors but three. For those other three sectors, we’re third in the competitive set.
Calgary’s cost competitiveness stems from favorable U.S./Canadian dollar exchange rate, competitive wage rates, low healthcare costs, low provincial and local-tax burdens on business, low electricity rates, financial incentives and competitive commercial rental rates.
This study was prepared in 2017 before the U.S. passed tax cuts for businesses. EY notes that the drop in U.S. Federal taxes did not have a material impact on the rankings for Canadian cities vs. U.S. cities. In addition, increased investment into the U.S. could lead to further appreciation of the U.S. dollar against the Canadian dollar. This could further increase the cost of doing business in the U.S. and provide Canada competitive advantages.
For more in-depth information on any of the sectors, download the location cost index study.