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Low Production Costs

Low Production Costs. Growing productivity, skilled workers, and low labour costs make businesses competitive. Canada's competitive position vis-à-vis the U.S. has improved substantially since 1991. Source: U.S. Department of Labor, Bureau of Labor Statistics, August 2001.

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Low Production Costs

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  1. Low Production Costs • Growing productivity, skilled workers, and low labour costs make businesses competitive. • Canada's competitive position vis-à-vis the U.S. has improved substantially since 1991. Source: U.S. Department of Labor, Bureau of Labor Statistics, August 2001 “ Our records for safety and productivity place the TMMC team among the industry’s best. And when it comes to quality, vehicles built at our Cambridge facility are among the highest rated vehicles in North America.” Takanori (Tak) Sakaue, President Toyota Motor Manufacturing Canada Inc.

  2. Employee Benefits* as a % of wages G-7 Comparison 80 60 40 20 0 Italy U.S. U.K. Japan France Canada Germany Employer-Sponsored Statutory * Employer-paid statutory benefits and wage-based taxes include: premiums for unemployment insurance plans; public medical plan premiums; public pension plan contributions; premiums for workers' compensation insurance; and other payroll taxes. Source: KPMG Management Consulting, 1999 Low Employee Benefits • Statutory and employer-sponsored benefits are lower in Canada than in the U.S. Total payments for statutory benefits and Canadian employer-sponsored plans and time not worked are 27.1% of salary and wages compared to 41.7% in the U.S.* • Lower medical insurance premiums are an important reason for this. • Payroll taxes are lower in Canada than anywhere else in the G-7. • *KPMG Management Consulting, 1999

  3. Employer-Sponsored Health Benefits Canada and the U.S. 0.6 Hospital, surgical, medical and major medical insurance 8.0 premiums* Short term disability, sickness 0.7 or accident insurance and long 0.7 term disability or wage continuation 0.7 Dental insurance premiums 0.5 0.1 Other (vision care, physical and mental fitness, etc.) 0.4 Quality Health Care at Low Cost • Canada's health care system is among the best and the cheapest in the industrialized countries: • Employer-paid health benefits as a percentage of workers' gross pay in Canada are about 22 percent of that in the U.S. • (2.1% compared with 9.6%). 2.1 Total 9.6 % of Gross Annual Payroll “The federal government’s medium-term budget position remains sound, even with full implementation of the major reforms to income taxation and new spending initiatives in priority areas such as health care and education that have been enacted or announced over the past year.” * U.S. value includes payments for retired employees Source: Employee Benefits, 1995, prepared by the Research Centre, Economic Policy Division , The U.S. Chamber of Commerce and KMPG, Employee Benefits Cost Survey, 1996. Adapted from KPMG report on Corporate Taxation and Employee Benefit Cost Guide for Large Service Firms, prepared for the ICT Branch, Industry Canada, March 2000 Statement of the IMF Mission on Canada, January 31, 2001

  4. Average Electricity Costs G-7 Comparison Canada France U.K. Germany U.S. Italy Japan 0 50 100 150 200 250 300 350 400 $US (12 operations) Average Electricity Rates G-7 Comparison Canada France U.K. Germany U.S. Italy Japan 0 2 4 6 8 10 12 14 US cents per kWh (12 operations) Source: KPMG Management Consulting, 2002 Low Energy Costs and Rates • Canada has abundant oil, gas, coal and hydro-electric resources. • Electricity costs for industrial users are significantly lower in Canada than in the U.S. • According to a recent study, the annual electrical costs for an average manufacturer are 30% lower in Canada than in the U.S. • Electricity rates in Canada are about 70% of those in the U.S.

  5. Construction Costs G-7 Comparison, Index: U.S. = 100 Italy Canada France U.S. U.K. Germany Japan 0 50 100 150 200 250 300 350 G-7 Comparison, Land Costs Index: U.S. = 100 France U.S. Canada Italy U.K. Germany +1828 Japan 0 100 200 300 400 500 G-7 Comparison, Office Lease Costs Index: U.S. = 100 Italy France U.K. Germany Canada U.S. Japan 0 50 100 150 200 Source: KPMG Management Consulting, 2002 Low Costs for Construction, Land, Office Lease • Building construction costs in Canada are roughly 20% lower than those in the U.S. even after accounting for additional materials for climatic conditions. • Land costs in Canada are • generally comparable with those in the U.S. • Canadian office lease costs are 63% of those in the U.S. • Lease costs include office space plus operating, utility, tax and insurance costs.

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