By Cosby Woodruff
The Montgomery Advertiser-- April 11, 2009
It costs less to do business in Montgomery than almost any other medium-size city in the country, according to a new study.
Among cities with populations between 100,000 and 500,000, Montgomery has the second lowest cost of doing business in the United States, according to a survey by KPMG, one of the country's leading accounting and economic development firms.
KPMG surveyed cities in this population range on business costs for land, construction, transportation, labor, taxes and utilities. Each city was compared to the national average in each category, then those categories were averaged to produce a city's cost index.
An index of 100 means a city matches the national average. Montgomery's index was 94.7, meaning the survey found the cost of doing business in town is about 5.3 percent below the national average.
Shreveport, La., was the only city where costs were lower. It topped the survey with a 92.7 index.
Todd Strange, chairman of the Montgomery County Commission, said the survey was good news but not surprising news."It is good to have an independent group saying that," he said. "I am sure we will use that information in our recruiting efforts to the fullest."
Charlie Paterson, the new chairman of the Montgomery Area Chamber of Commerce, agreed."My prediction is that our economic development team will use that information to market the region," he said.
But Paterson pointed out that the overall result of the survey might not mean as much to companies as some of the individual results.He said business costs vary by industry, and each industry is primarily concerned about the costs that affect them the most."The specific needs of specific companies are so different," he said.
For instance, Paterson pointed out that transportation costs are important to auto manufacturers but don't matter as much to data storage firms.
Hartley Powell, national leader of strategic relocation and expansion services for KPMG, said the survey looks at 27 factors for 17 different industries.
But he said the survey can be used to focus on a specific industry's needs."We work with so many different companies helping them set up to relocate and expand," he said. "It boils down to cost."
Keivan Deravi, an economist at Auburn Montgomery, said he knew Montgomery's business costs were low before he saw the survey."That makes perfect sense to me," he said.
The survey found the price of land in Montgomery is particularly low. Montgomery had the lowest land costs of any of the surveyed cities, and came in No. 2 in both labor and transportation cost.
Deravi said with incentives, land cost is effectively zero for large developments around Montgomery."We can't go any lower on that," he said.