Shreveport Ranked Most Cost-Attractive Business Location Among Small U.S. Cities: KPMG Study

Shreveport Most Cost-Attractive Among Small Cities

Youngstown Close Behind; Savannah, Lexington and Little Rock Also Seen as Highly Cost-Competitive.

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Shreveport, La., is the most cost-friendly city to do business among the 27 small-sized U.S. metro areas (those with populations less than 750,000), according to the 2016 Competitive Alternatives study by KPMG LLP, the audit, tax and advisory firm.  

Shreveport’s favorable natural gas costs and low effective corporate income tax rate contributed to its first place ranking in the study, which compares key cities across a range of costs and other factors related to doing business. The full report is available here

In the small-sized U.S. cities category, Youngstown, Ohio, ranked second with Savannah, Ga., and Lexington, Ky., following third and fourth, respectively. Other cities that performed well were Little Rock, Ark., Gulfport-Biloxi, Miss., Jackson, Miss., Montgomery, Ala., Mobile, Ala., and Cedar Rapids, Iowa.  

“KPMG’s Competitive Alternatives study provides insight into business location costs in cities across the United States and serves as a valuable benchmark for business executives, economic developers and policymakers considering sites for their business operations,” said Ulrich Schmidt, a managing director in KPMG’s Global Location and Expansion Services practice, which helps companies that are expanding, relocating or consolidating their facilities. “Many factors go into site selection decisions, and a study such as ours helps businesses, city leaders and economic development teams begin to consider investments that should ultimately be good for the community and good for business,” he added.   

The 2016 KPMG Competitive Alternatives study measured 26 key cost components in each market, including costs associated with taxes, labor, facilities, transportation and utilities, as they apply to seven different business-to-business service sector operations and 12 different manufacturing sector operations. 

Cost Index Results by City
The KPMG study revealed that Shreveport had a cost index of 91.7, representing business costs 8.3 percent below the U.S. national baseline of 100.0. Shreveport was followed by Youngstown at 92.5, Savannah at 93.1, Lexington at 93.2 and Little Rock at 93.3. Contributing factors to the top ranked small-sized U.S. cities follow:  

  • Shreveport’s top ranking resulted primarily from its low natural gas costs and effective corporate income tax rate. The low tax rate is a product of various state incentives that are applicable in Louisiana. 
  • Youngstown ranked second overall, despite having labor costs that are close to average for this group of cities. Low costs for office leasing, industrial leasing, statutory plans and property taxes all contributed to Youngstown’s favorable ranking, as does its low effective corporate income tax rate. 
  • Savannah ranked third overall, even though, its labor costs are close to average for this group of cities. As a major port, Savannah is the cost leader for transportation costs among the small cities. Savannah also has low industrial construction costs and a low effective corporate income tax rate, helped by Georgia’s tax credits for job creation. 
  • Lexington’s strongest advantages are its low costs for electricity and statutory labor, coupled with low property taxes. Below-average costs in most other categories placed Lexington fourth for total operating costs. 
  • Little Rock sees very strong results in all aspects of labor costs, but especially for salary and wage costs, and ranked third among the cities for total labor costs. Little Rock also has relatively low industrial lease and electric costs. 
  • Gulfport-Biloxi, at 93.3, ranked second for industrial construction and total operating costs, and third for transportation and statutory and benefit costs. 
  • With a cost index of 93.3, Jackson ranked seventh overall and first in operating costs among the small cities compared, with total labor costs ranked second, supported by competitive statutory and benefit costs. Industrial lease, industrial building construction and transportation costs are also all very competitive. 
  • Montgomery, at 93.4, has the lowest industrial lease costs and ranked second for transportation costs. Other strong areas include natural gas and industrial land costs. 
  • Mobile, at 93.7, has the second lowest industrial land costs and third lowest industrial construction costs, making for very low costs for firms seeking to establish a new greenfield factory. Mobile also has very competitive costs for natural gas and transportation. 
  • Cedar Rapids, at 93.8, showed strong results for electricity costs and office lease costs – both ranked the fourth lowest among the group of small cities. 

In contrast to the most cost-friendly cities, Manchester, N.H., and Anchorage, Alaska, represent the most expensive small-sized U.S. cities in which to do business, with cost indexes of 97.2 and 108.1, respectively. Manchester has relatively high costs in most areas, including the highest utility costs and second highest labor costs. Despite many cost disadvantages, Manchester ranked seventh for office lease costs and tied for first for sales taxes – as New Hampshire is one of four states with no sales tax. Anchorage’s remote location contributes to its cost disadvantages for most cost factors and makes it the highest cost city among the 27 small cities. However, there is no sales tax in Anchorage.  

Cost indexes for the 27 small-sized U.S. cities follow. The baseline cost index (U.S. = 100.0) is defined as the average business costs in the four largest U.S. metropolitan areas: New York, Los Angeles, Chicago and Dallas-Fort Worth.

KPMG’s 2016 COMPETITIVE ALTERNATIVES STUDY
(U.S. Cities with population of less than 750,000)

Rank City Cost Index
1 Shreveport, LA 91.7
2 Youngstown, OH 92.5
3 Savannah, GA 93.1
4 Lexington, KY 93.2
5 Little Rock, AR 93.3
6 Gulfport-Biloxi, MS 93.3
7 Jackson, MS 93.3
8 Montgomery, AL 93.4
9 Mobile, AL 93.7
10 Cedar Rapids, IA 93.8
11 Charleston, WV 93.8
12 Sioux Falls, SD 94.1
13 Fargo, ND 94.3
14 Boise, ID 94.3
15 Billings, MT 94.4
16 Spartanburg, SC 94.5
17 Cheyenne, WY 94.6
18 Wichita, KS 94.7
19 Saginaw, MI 94.7
20 Bangor, ME 94.8
21 Champaign-Urbana, IL 94.8
22 Beaumont, TX 94.9
23 Madison, WI 95.7
24 Spokane, WA 96.0
25 Burlington, VT 96.9
26 Manchester, NH 97.2
27 Anchorage, AK 108.1

These results are part of KPMG’s global 2016 Competitive Alternatives study, which measured business operating costs in more than 100 cities in 10 countries. The complete 2016 global study is available online at www.competitivealternatives.com

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 174,000 professionals, including more than 9,000 partners, in 155 countries. 

Contact:
Ann Marie Gorden/Robert Nihen
KPMG LLP
201-505-6288/201-307-8296   
agorden@kpmg.com / rnihen@kpmg.com   

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