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<html> <head> <meta name="Generator" content="Corel WordPerfect 8"> <title>MR. MARCHI - ADDRESS AT THE LAUNCH OF THE KPMG STUDY: THE COMPETITIVE ALTERNATIVES: A COMPARISON OF BUSINESS COSTS IN NORTH AMERICA, EUROPE AND JAPAN - OTTAWA, ONTARIO</title> </head> <body text="#000000" link="#0000ff" vlink="#551a8b" alink="#ff0000" bgcolor="#c0c0c0"> 99/19 CHECK AGAINST DELIVERY NOTES FOR AN ADDRESS BY THE HONOURABLE SERGIO MARCHI MINISTER FOR INTERNATIONAL TRADE AT THE LAUNCH OF THE KPMG STUDY: THE COMPETITIVE ALTERNATIVES: A COMPARISON OF BUSINESS COSTS IN NORTH AMERICA, EUROPE AND JAPAN OTTAWA, Ontario March 11, 1999 (1:00 p.m. EST) This study is good news for Canada, and for all regions of the country. For the second time in less than two years, Canada has placed first in KPMG's international comparison of business costs. This year's study is even better. It now includes eight countries in its research -- the G-7 [Group of Seven nations] and Austria -- and it has broadened the scope of industry sectors analysed. On practically every measure in this new study, Canada comes out as the lowest cost alternative among the industrialized nations, and Canadian cities consistently top the list when compared with locations in other countries. By clearly demonstrating Canada's cost advantages to international business investors, the KPMG study squarely confronts any myths that may still persist, according to which Canada is a high-cost business environment. Any business leader thinking about expansion -- especially in the North American market -- should take a serious look at the data in this study. I want to congratulate the KPMG researchers for a job well done. And I want to acknowledge the main corporate sponsors: the Royal Bank, Ontario Power Generation and Bell Canada, along with the Government of Austria (a new sponsor). This year's study has close to 30 sponsors, including many local and regional Canadian economic development agencies. This local participation should not go overlooked. Investment promotion is just as important at the community level as it is at the international level. Transnational companies may choose to invest in a country because of its attractive business climate, but the final site decision is a local one. In other words, companies may choose a country but they invest in a community. This is why we have to work together to attract new job-creating investment -- as we did with Harris Corporation, a high-tech firm based in the United States that recently committed well over $100 million to export-oriented plants in both Montreal and Calgary. Make no mistake, the international competition to attract new investment is intense. We had to sell Harris on Canada. We need to be very aggressive to attract the foreign investment dollars that mean more jobs and economic prosperity here at home. Economists tell us that every billion dollars in new foreign investment, sustained over a five-year period, brings with it some 45 000 jobs. We want those jobs for Canadians. And we want the technology and the R&D [research and development] that are imported here, as well as the new export opportunities generated by foreign direct investment. That is precisely why our government has made investment promotion a priority. And that is why we are working to carry the message of the "Canadian Advantage" to business investors and site selectors around the globe, as the Prime Minister and I did in January in Davos. Fortunately, we have a good story to tell. Over the last few years, we have made Canada one of the most attractive environments for business investment in the world. We have taken firm control of government spending, balanced the books and restored our favoured ranking in international money markets. We have created a highly supportive environment for innovation through R&D tax incentives and new funding for scientific research. We are chalking up record levels of export sales. We have a complete range of export financing services and more than 800 Trade Commissioners at home and abroad. As is now well known, we are judged by the UN Development Program to be the best place in the world in which to live. And now, on top of all that, we have the evidence from KPMG that Canada has the lowest cost of doing business in the G-7! On practically every measure employed in the study, Canada ranks as the best choice for investors. On labour costs, for example, we are the lowest among the G-7 countries. Compared with the United States, Canadian labour is 32 percent less expensive. At the same time, we have one of the world's most highly skilled and technologically sophisticated labour forces. In terms of industry sectors, Canada leads in eight of the nine sectors analyzed by KPMG (and we are a very close second in the ninth). When it comes to the high value-added technology and capital-intensive industries, Canadian locations are almost 8 percent less expensive than the United States. The software sector looks particularly good for Canada: the costs of operating a software company here are at least 12 percent lower than in comparable U.S. locations.That means a 110-employee software firm would save $1.6 million a year in operating costs if it was based in Canada instead of the United States. When we look at the costs of doing business in Canadian cities, as compared with cities in other G-7 countries, Canada consistently comes out on top. There are 25 Canadian cities included in the study and every single one of them offers a lower-cost environment for business than locations in the United States. That includes the U.S. Sunbelt cities, which are often touted as having a cost advantage over Canada. So the KPMG study refutes many of the myths about Canada being a high-cost business environment. And let me draw your attention to the fact that the costing model used by KPMG includes business taxes too. When taxes are factored in with all the other costs of doing business -- such as cost of land and buildings, of electricity and telecommunications, of transportation, and of labour (including benefits) -- Canada comes out with the lowest overall costs. Our next challenge is to make sure that investors across the international community hear and understand this good news too. We have to use this story to attract the new investment that means jobs and economic growth for Canadians. A few weeks ago, I announced an expansion of our popular Program for Export Market Development, and many new community investment outreach campaigns are being planned as I speak. The KPMG study can be used by communities to get onto the radar screens of foreign investment decision makers. In addition, I have asked our Heads of Mission and Trade Commissioners in posts around the world to bring the KPMG study to the business communities in their countries. In fact, Canadian Ambassadors to several European countries are here with me today. But this is a story that we all have to tell. We can all be good-will ambassadors in spreading the message of the Canadian Advantage. We need to employ a Team Canada effort on investment as well because ultimately, this country works best when it works together. I am delighted to know that so many of you share our interest. I look forward to working with all of you to attract the new investment that will help keep Canada number one -- on every count. Thank you. </body> </html>

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