Friday, April 18, 2008

report compares business costs in youngstown to U.S. and international regions

KPMG has released it bi-annual "Competitive Alternatives" report, comparing business costs in various industry sectors in 136 regions across the world.

Youngstown was chosen as the only region of Ohio to be included in the 2008 version.

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The report looks at a collection of business costs: wages, land, transportation, utilities, federal/state/local taxes, etc.

And these costs change from sector to sector, from software development to biomedical R&D, for example - 17 sectors in all.

The website for the report has a nifty little tool, allowing one to compare via graphical form business costs in specific sectors for up to five regions in the world at a time.

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As an experiment, I examined Youngstown, San Jose (Silion Valley), Seattle, Buffalo and Boise in software development. Of of the five, Youngstown was the second least expensive behind Boise. albeit by a marginal amount.

If fact, business costs in Silicon Valley for the software industry were 11% higher than Youngstown. Business costs in Seattle were 5.1% higher than Youngstown.

At a smaller scale, business costs in Buffalo were 1.3% larger than Youngstown, and costs in Boise were 1.0% cheaper than Youngstown.

All of these calculations do not include the various added incentives that the state or city many provide to software companies for moving into their jusrisdictions. So for example, locating within a business incubator, city development grants, etc.

The report also identifies distribution/logistics and information/communications technology as emerging sectors for the Youngstown regional economy, which they label as 590,000 people (prolly does not include lawrence country).

Looking at costs across sectors, Youngstown is in the exact middle of the pack when compared to other regions from the East of U.S./Canada, the mega-grouping in which Youngstown is placed. Looking at the entire U.S., for regions between 500,000 to 1.5 million residents, Youngstown is smack in the middle of the pack. Honolulu (the highest) has business costs 15% higher than Youngstown, Little Rock (the lowest) has business costs 6.8% lower than Youngstown.

Picking out other sectors, biomedical R&D, metal machining, and plastics companies in Youngstown have business costs lower than the U.S. average.

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From a macro perspective, the declining value of the U.S. dollar makes direct foreign investment into the U.S. a much more advantageous move than even two years ago. Since 2006, the euro's exchange rate with the U.S. has shifted by 24%, with the british pound by 14%, and the japanese yen by 5%.

So the final question:
with this information spreading across the globe via the KPMG report, how does the Mahoning Valley take advantage of being included (admitted accidenitally - there will be another Ohio city in two more years) in the report?

For software development companies on West Coast, expanding operations into the Youngstown and its stregthening cluster of software companies in downtown may be a wise business decision.

The people are here, the capital (venture, angel, and seed) have been provided to other companies, and other software firms are located here as well - operating at a reasonable price to boot.

1 comment:

Anonymous said...

JPEG for a bar chart? Really??