This year, Mexican production houses took eight out of eleven golds at FIAP in Buenos Aires, something that surprised no one working in Mexico City. AMFI, the Mexican Association of Filmmakers, comprised of 60 production houses, collectively filmed 2,825 films in 2000. Add to that the fact that an estimated 15% of production houses exist outside the bounds of AMFI and the number of spots produced nears 4,000. This year, Cesar Ahumada, executive producer at La Fabrica Films, estimates there are twice the number of production companies outside of the organization.

Many still think of Mexico as a destination for production service jobs, but the peso has been on the rise for three years straight and Canada now offers the best value for the US dollar in North America. Yet foreigners are still coming. Now for talent, weather and locations.

In mid-January of this year Canadian ex-pat Susie Neil opened Tonic Films, the international division of Mexico City's Metro Films, with the purpose of bringing international directors and service work to the Mexican market. What she found is a vibrant production scene and an agency scene including all of the international groups and more.

Says Neil, "I don't think a lot of directors were considering Mexico a place to do creative and there is very good creative here. Mexican creative is very visual. You're not yet dealing with segments of the population. Mexico has a huge population with many different socio-economic classes and the creative has to be inspirational for every person. A lot of the spots are visual and beautiful because everybody responds to visual and beautiful."

Neil estimates that productions in Mexico are usually 30% cheaper than in the US but that number will drop if the peso continues to appreciate.

Carl Jones, vice president creative director with BBDO, Mexico, moved from Toronto during the recession of '92. NAFTA was in the works and Canadian laws protecting advertisers in a competitive market were no longer in effect. Jones decided to come to Mexico where free trade was expected to mean growth.

That move proved a wise one. BBDO is now the second biggest agency in Mexico, and is producing outstanding local, regional and international work.

Jones notes that local agencies have developed dramatically in the last ten years. When he arrived, Mexican agencies were still departmentalised, with copywriters driving the creative process, handing off storylines to storyboard artists who would leave most of the visual work to the director. BBDO instead developed the more common copywriter/art director team, a system most Mexican agencies now use.

He adds that only two out of the country's top 20 agencies are locally owned, which proves the indigenous creative will have to do some work to compete with multinationals. Post-production is also an area where Mexico is not competitive internationally. The technology exists, but the operators aren't yet thinking as creative artists. Post-production alliances are often made with Canadian companies, though many Mexican production houses are using local post and getting results.

Jones also notes that production is doing better than creative. "For the last five years Mexico has had the best production house at FIAP. Creatively... I think Mexico is the largest Spanish [talent pool] in the world. For its size, Mexico should be winning a lot more awards. Countries like Spain and Argentina have done better," says Jones.

That may be changing too. The recent economic breakdown in Argentina means that Mexico, a country of 100 million people, is getting noticed as a major commercial player for the Latin American market by clients such as Coca-Cola and Procter & Gamble.

La Fabrica, one of Mexico's largest production houses, is seeing the effects. They are just starting to do production work in Argentina, where productions are half the price, and are considering launching more permanent arrangements in Buenos Aires.

Working with Mexican agencies Teran/TBWA, McCann-Erickson, Lowe Lintas, and a New York Hispanic agency Reynardus and Moya Advertising, La Fabrica boasts impressive directing talent including up-and-coming director Hector Hernandez, Joe Solis, principal director and part owner and Luciana Jauffred, a producer who recently started directing. "She is in her early thirties. She has a female sensitivity and her style is developing into comedy," Ahumada says.

"There's a lot of new production companies that are very small and very competitive. Also, Mexico is importing a lot of talent from Argentina... so we are exporting jobs to them because not only do we compete against the local companies, but now we're competing against Argentinian companies that are very hard for us to beat in terms of money."

With only two film schools each producing about 25 graduates a year the present boon in directing talent comes as a surprise. In a country with a long legacy of film production and where half the population is under 34, it shouldn't be.

Director Fernando Arrioja studied in LA and got his first directing job with Partners in Toronto. He went to Mexico to do a Gatorade spot for Grey last year and hasn't returned.

He recently shot a spot for Centenario Tequila through BBDO, Mexico and production house Cineconcepto. In a dazzling effort to target the Mexican jet set, Arrioja juxtaposes the tequila bottle with modern Mexican art and architecture. The next spot will feature liquid that morphs to show the same connection.