The flood of automotive assembly plant investment in the U.S. Deep South has created a boom for states in the middle of the north-south I-75 automotive corridor, but less of a bonanza for the southern states themselves, says a study done by the Federal Reserve Bank of Chicago.

Kentucky, Tennessee and other states in the middle of the corridor have benefited most from parts makers locating in that area to supply the new assembly plants in Alabama and Mississippi, said Thomas Klier, senior economist for the bank.

"You're golden if you're in the middle," said Mr. Klier, who presented his findings on the geography of North American auto production to a conference in Detroit yesterday.

Kentucky's share of state gross domestic product from autos has risen steadily since 1990 and surpassed that of Michigan in 2001, he said in his presentation. In 1984, Michigan's state gross domestic product from autos topped 16 per cent. By 2001, autos represented a little more than 8 per cent of state GDP.

Vehicle assembly is concentrating in the centre of the United States, Mr. Klier added.

In 2001, 63 per cent of light vehicle assembly plants were in the corridor, which he defined as Wisconsin, Michigan, Illinois, Indiana, Ohio, Kentucky and Tennessee. That compared with 47 per cent of light vehicle plants in 1970.

This trend implies that plants on the periphery of the continent, particularly the U.S. northeastern seaboard, are most vulnerable to closing -- in part because of the distance from the hub, which is still Detroit, and in part because supplier networks are developing along the north-south I-75 corridor.

Some plants outside the corridor have already been shut, including a General Motors Corp. plant in Ste-Thérèse, Que. Canada's remaining assembly plants are close to the corridor and the Detroit hub.

"I don't see a reason why, on balance, they would keep their coastal plants open," Mr. Klier said of the auto makers.

The growth of assembly plants in the South has an impact on parts makers further north, Mr. Klier said.

Parts makers in Michigan, for example, that want to supply assembly plants in Alabama, are more than one day's drive away, Mr. Klier said. "You're probably going to have to compete with somebody who's closer." Parts makers operating in Ontario face similar challenges in trying to supply Honda, Mercedes-Benz and Hyundai in Alabama, as well as Nissan Motor Co. Ltd. in Mississippi.

Michael Moskow, president of the Federal Reserve Bank of Chicago, cited estimates showing that the industry has the capacity to assemble 20 million vehicles annually in the United States, about three million vehicles more than the annual average sales of approximately 17 million in the past three years.

"The question now seems not if, but when and where capacity reductions are going to occur," Mr. Moskow said.