New Orleans, Nashville Close Behind; Omaha, Albuquerque, Memphis also seen as highly cost-competitive.
Baton Rouge, La., is the most cost-friendly city to do business among the 18 mid-sized U.S. metro areas (those with populations between 750,000 and 2 million), according to the 2016 Competitive Alternatives study by KPMG LLP, the audit, tax and advisory firm.
Baton Rouge’s favorable costs for industrial facility construction, property taxes, natural gas, electricity and labor all contributed to its first place ranking in the study, which compares 18 mid-sized U.S. cities across a range of costs and other factors related to doing business. The full report is available here.
New Orleans was the second most cost-competitive location in the mid-sized category, followed by Nashville, Tenn., Omaha, Neb., Albuquerque, N.M., and Memphis, Tenn. Other locations ranked among the top 10 mid-sized U.S. cities included Indianapolis, Oklahoma City, Salt Lake City, and Raleigh, N.C.
“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 Baton Rouge had a cost index of 92.8, representing business costs 7.2 percent below the U.S. national baseline of 100.0. New Orleans followed at 93.1, Nashville at 93.8 and Omaha at 93.9. Contributing factors to the top ranked mid-sized U.S. cities follow:
In contrast to the most cost-friendly cities, Trenton and Honolulu represent the most expensive mid-sized U.S. cities to do business, with cost indexes of 101.8 and 103.9, respectively. Despite cost disadvantages in most areas, including the highest labor costs among the mid-sized cities, Trenton ranked second for industrial lease costs and fifth for transportation costs. High costs in all utility and transportation cost categories limit Honolulu’s rank. Honolulu also has the highest effective corporate income tax rate among this group of mid-sized cities.
Cost indexes for the 18 mid-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 750,000 to 2 million)
|1||Baton Rouge, LA
|2||New Orleans, LA||93.1|
|8||Oklahoma City, OK||94.7|
|9||Salt Lake City, UT||95.0|
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.