Cost factors

Competitive Alternatives presents a comprehensive analysis of business costs that includes 26 separate cost factors that vary by location.

Major cost factors

Labor costs represent the single largest cost category, and represent between 40 and 86 percent of total location-sensitive costs for the industries examined. Labor costs reflect a broad mix of specific job positions and include wages and salaries, statutory labor costs (payroll-based taxes), and all other benefits typically provided by employers.

Transportation (freight) costs vary by industry, product and markets served, and can represent up to one quarter of location-sensitive costs for the specific manufacturing operations studied. Freight costs have decreased significantly since 2014, due to lower global oil prices.

Total tax costs typically represent up to 18 percent of location-sensitive costs for the operations and locations examined. Corporate income taxes and property taxes, both calculated net of generally applicable tax incentives, represent the major forms of taxation that are widely applied in all study countries.

Taxes are the subject of a companion KPMG report, Competitive Alternatives: Focus on Tax, which analyzes international tax issues in greater depth. The new edition of the Focus on Tax report will be available in late June 2016 on this website.

The table below summarizes the lowest cost countries for each of labor costs, transportation, and taxes, as well as other major cost factors.

Leading countries, by cost factor
Cost factorLowest costSecond lowestThird lowestFourth lowest
Labor costs:
Salaries and wages
Total labor costs
 
Mexico
Mexico
 
Italy
Canada
 
France
Italy
 
Canada
Netherlands
Facility costs:
Downtown office
Suburban office
Industrial lease
Industrial land and construction
 
Mexico
Germany
Canada
Mexico
 
Canada
Mexico
France
Germany
 
Netherlands
Canada
Mexico
France
 
Germany
Netherlands
Germany
Italy
Transportation costsJapanCanadaGermanyNetherlands
Utility costs:
Electricity
Natural gas
 
Canada
Mexico
 
Netherlands
United States
 
Mexico
Canada
 
France
Australia
Effective corporate tax rates:
Digital services
R&D services
Corporate services
Manufacturing
 
Canada
France
United Kingdom
United Kingdom
 
United Kingdom
Netherlands
Canada
Canada
 
Netherlands
Canada
Netherlands
Netherlands
 
France
United Kingdom
Australia
Italy
Property-based taxesNetherlandsMexicoGermanyAustralia
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