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:
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)
|5||Little Rock, AR||93.3|
|10||Cedar Rapids, IA||93.8|
|12||Sioux Falls, SD||94.1|
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.