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V O L . X X I I N O. I X M AY 2 , 2 0 1 6 18 I N T E R N AT I O N A L T R A D E F O C U S MB: That suggests it's no longer a domestic competition, but, in fact, an international competition to be considered as the host city for a ma- jor fi nancial institution's back offi ce headquarters. Is that how you see it? JB: is is a major theme for Maine, obviously, because of the historically low exchange rate and proximity to Canada. e exchange rate in Quebec province is at historical lows, with 30% less cost to do business in Montreal. Now, this is very interesting. Your governor, Paul LePage, has been very active in promoting incentives. ere's been some push-back. It's politically contentious to talk about incentives today in this political climate. People regard them as 'corporate welfare.' But this is important, I think, for your readers to understand: Under the radar screen, Montreal enacted two, very powerful incentives that have lured companies like State Street and Morgan Stanley. e fi rst incentive is a fi ve-year income tax exemption for managers transferred from the United States to Montreal. at's powerful stuff . e second is a 24% tax credit for salaries of fi nancial services professionals. So this underscores the importance of incentives. Potentially, Bank of America, Morgan Stanley, State Street, JPMorgan, you name it, could move to Montreal, capitalize on the exchange rate and capitalize on those two very powerful, well-crafted business incentives. MB: Were those incentives created with the intent of luring banking and fi nancial service companies to locate offi ces in Montreal? JB: Yes, they were. And the eff ort is really to lure industry, white-collar industry, from the 50 states to north of the border. MB: So, if that's proving to be a somewhat compelling lure for U.S. banking and fi nancial service com- panies to consider locating back offi ce operations in Canada, is the fl ip side of that for states to create their own incentives to give a sec- ond thought to staying in the United States, but perhaps in a different municipality with lower costs? JB: It underscores just how important incentives are today. We always talk about economic development as the second 'War Between the States.' But, in fact, it's more than that. Now, there's the reality of global competition, and you have your neighbors in the north, namely in the Province of Quebec, knocking on your door for this type of industry. I think that's important, because fi ve or six years ago, you wouldn't view Montreal as the threat that it is today, based upon the exchange rate and these economic incentives. Companies will always have a brick-and-mortar presence in Boston and New York City, but increasingly they want their back offi ces to go to lower-cost markets, like Montreal or Portland. MB: How did you select these 45 cities to analyze for this study? JB: e honest answer is: ese are the cities that our clients are asking us to look at. We're obviously a for-profi t company. We don't do these studies for our amuse- ment. We meet with companies and we show them comparisons between the cities they've asked us to look at. MB: So, in other words, these are cities that in some respect are already on the radar of your clients? JB: ese are the top 45 cities. So you might ask: Why would Tunisia be in this market? It's because one of our cli- ents is Hewlett-Packard. And they have a back offi ce in Tunisia. Airbus actually is putting operations in Tunisia. Despite all the civil war there, it is the most sta- ble economy in northern Africa. Why would Warsaw, Poland, be in the study? Warsaw, in terms of industry attraction, is one of the most compelling markets in Eastern Europe. MB: How often do you do these studies? JB: Every three to four years. And every time we do a study for a particu- lar industry, it refl ects real-time labor Comparison: What it costs to operate a corporate back office in Portland N O T E : Includes all major geographically variable operating costs for a 125-worker corporate back offi ce occupying 30,000 square feet S O U R C E : The Boyd Co. Inc. » C O N T I N U E D F RO M P R E V I O U S PA G E San Francisco New York City Boston Providence Portland Montreal Weighted average annual earnings $56,123 $52,956 $49,220 $47,871 $46,961 $32,459 Annual base payroll $7,015,375 $6,619,500 $6,152,500 $5,983,875 $5,870,125 $4,057,375 Fringe benefi ts $2,735,996 $2,581,605 $2,399,475 $2,333,711 $2,289,349 $1,095,491 Total annual labor costs $9,751,371 $9,201,105 $8,551,975 $8,317,586 $8,159,474 $5,152,866 Labor costs San Francisco New York City Boston Providence Portland Montreal Electric power $96,182 $146,075 $182,482 $146,233 $141,090 $47,980 Offi ce rent $1,182,857 $1,183,534 $938,346 $616,466 $404,887 $528,045 Amortization and sales tax $1,299,718 $1,300,060 $1,293,139 $1,295,113 $1,291,165 $1,316,113 Corporate travel $132,802 $129,009 $121,338 $84,747 $72,020 $70,376 Total other costs $2,711,559 $2,758,678 $2,535,305 $2,142,559 $1,909,162 $1,962,514 Other costs $0 $3M $6M $9M $12M $15M Montreal Portland Providence Boston New York City San Francisco $12,462,930 $11,959,783 $11,087,280 $10,460,145 $10,068,636 $7,115,380 Highest-cost city in North America Lowest-cost city in North America Total annual geographically variable operating costs

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