MEXICO : Progress and Promise : Changing Lifestyles : The Drive for Reform Leaves Some Behind : Salinas’ streamlining of the public sector has brought hardship to many who depended on the government.

In 1937, President Lazaro Cardenas built a huge sugar refinery here, a monument to populism in a sea of cane fields. Patronage counted more than profits for Mexico’s rulers then, and a company town blossomed along with the mill’s state-financed payroll.

Samuel Cerezo Aponte, born here a generation later, worked eight years as an electrician’s apprentice in the mill’s machinery shop before achieving his dream of “permanent” employment last March. Wages were a low $5 per day, but his union contract promised job security and a new home for his growing family.

Five months later, however, the Cardenas legacy came to an abrupt and bitter end here--and so did Cerezo’s livelihood.

President Carlos Salinas de Gortari, from the late Cardenas’ own Institutional Revolutionary Party, has set out to dismantle the paternalist state by slashing its deficit and selling government-owned companies. On Aug. 22, his government declared the sugar refinery bankrupt.

Riot police, called “the scorpions,” surrounded the place and shut it down pending reorganization; 2,600 jobs were eliminated--2,000 of them permanently.

Workers lost more than their paychecks. The bankruptcy declaration legally allowed the company to shed its entire payroll for less than half the severance that labor contracts required it to pay. And to collect their money, employees had to sign away claims to a union housing fund financed by wage deductions, giving up the dream of long-awaited homes.

“What’s happening here is very sad,” says Estela Aleman, the laid-off electrician’s wife, who is pregnant with the couple’s fourth child. “Thousands of people depended on that plant. Now we don’t have any money, not much food and not a ray of hope. We are, in a word, desperate.”

Salinas contends that his reforms and a proposed free-trade agreement with the United States and Canada will bring investment and jobs to Mexico and, in the long run, improve the lives of Mexicans.

Yet interviews over the past month make clear that millions across Mexico--like the 37-year-old Cerezo and his family--have been left behind in the government’s rush toward modernization.

While the president got high marks for his performance, honesty and long-term vision, the interviews often revealed a gap between Salinas’ image and the harsh reality of everyday life for many.

This is a look through the eyes of three working-class families--headed by a laid-off factory worker, an insolvent farmer and a struggling doctor--at the downside of the modernization effort.

The Jobless Electrician The first hint of trouble in Zacatepec came July 8, when some sections of the sugar mill shut down without explanation. Elections were coming up Aug. 18, and rumors of a definitive closing swept the town. Salinas’ party, the PRI, denied them. The PRI-led union raided an education fund for workers’ children to keep paying salaries--and to keep the workers loyal.

“They gave us this money and said, ‘Here, vote for the PRI,’ ” electrician Samuel Cerezo’s wife recalled. “And that’s what we did. We thought we were defending our livelihood.”

The PRI won big in Zacatepec and increased its majority in the national congress. Four days later the mill was declared bankrupt.

“We were deceived,” Cerezo said.

The electrician pedals his bicycle about town these days, stopping to speculate with other laid-off workers about their future. The mill is $83 million in debt. Workers acknowledge that it was a drain on the state that had to be stopped. But they feel cheated just the same.

“The president’s free-market ideas could bring good results,” Cerezo said. “But why punish us for this (bankruptcy)? They called it a cooperative, but the workers never had a say in how it was run. It was the managers, the union leaders who got rich here.”

Armando Canales Trevino, the current plant manager, shrugs at such complaints. “We can either put on the brakes, cut jobs and survive economically or we drown and everyone loses out,” he says.

Canales has promised government aid to help skilled laid-off workers set up small businesses to service the plant’s equipment. But so far just one such shop, with nine employees, is operating, and Cerezo says he’s unaware of any opportunity for him.

Cerezo and his family have moved from their rented house to the more cramped quarters of a friend, who’s not charging them. Samuel’s sister, a maid in California, started sending money to help feed his children--ages 10, 6 and 2. The whole family sleeps on two double beds squeezed wall to wall in the only bedroom. There’s a two-burner stove, a lemon tree, an outdoor toilet and not much else.

When the owner returns from a trip in a few weeks, they must go.

But where? The new management is rehiring 600 workers to streamline the mill, apparently as a prelude to a sale, but Cerezo’s department was eliminated. The only thing left to demand are his benefits--the 12.5% of eight years’ wages that disappeared into the housing fund, which vanished without an accounting.

Of 1,500 workers who lost housing benefits, about 300 are still fighting the case in court. The rest have signed away their due in exchange for severance checks. Cerezo’s uncollected check, about $500, tempts him more each day.

“My thinking now is to take my little bit of money and go . . . to California.”

The Insolvent Farmer Faustino Salinas’ 20-acre ejido farm on the 8,100-foot slope of La Malinche volcano in Tlaxcala state is stunningly beautiful at sunset as waves of wheat shimmer in the fading light. But at night the crystal-clear air can freeze his fields, and the black volcanic soil has not been generous. A closer look at the grain reveals damage from a September hailstorm.

As if the perennial struggle with nature were not enough for the 39-year-old farmer, he also feels victimized by the Mexican government.

First, in the mid-1980s, the authorities encouraged farmers to switch from barley, his main cash crop, to wheat. Mexican breweries could import American barley cheaper than they could grow it, the farmers were told, and the country needed to become self-sufficient in basic foods. High wheat prices would be guaranteed.

Then President Salinas--no relation to Faustino Salinas--took office in 1988 and ended crop subsidies, undermining the farmers’ profits. He also privatized the government’s corrupt, failing farm insurance agency. The new insurer reduced Faustino Salinas’ coverage without warning. A few weeks later a frost killed his wheat crop, leaving the farmer $6,500 in debt and, under Mexico’s new free-market rules, ineligible for new crop loans or insurance.

“The only one who will give us credit now is the shoemaker,” said the farmer.

Hundreds of thousands of other ejido farmers across Mexico have fallen into the same crisis. A legacy of the 1910 Mexican Revolution, the ejido land-tenure system gave peasants hereditary rights to work small farms but not to own or sell them. Because the land cannot be used as collateral, ejido farmers have always depended on the state for credit.

As ejidos were divided among the original farmers’ heirs, however, they became less efficient and more a burden on the state. While withdrawing support from the ejidos , the government is encouraging ejido farmers to form joint ventures with foreign or Mexican capitalists.

But like most of Mexico’s 3 million ejido farmers, Salinas lives on unirrigated land of little attraction to risk-taking outsiders. So he must struggle alone to eke out a living for his family of eight.

He is bitter but not about to give up.

“President Salinas has brought disaster to the countryside that I know,” he says. “And for what? The country is still importing wheat.”

The family has hunkered down in its squat concrete-block house, under a leaky roof it cannot afford to fix. Julia Mendez, Salinas’ wife, collects used clothes from neighbors, mends them on her sewing machine and resells them in town. Their oldest child, Luis Enrique, 16, has abandoned the costly dream of becoming a veterinarian and works full time on the farm, which is turning away from cash crops to less risky forms of subsistence.

They have acquired a couple of milk cows and some chickens and taken up beekeeping. Julia and the younger children dig up the garden heliotrope that grows wild near their home and sell the roots to a local medicine man.

Salinas has organized 324 Tlaxcala farmers and petitioned the government for loans to make the switch from grain production to his brand of “integral family farming.” They are awaiting a reply.

“If the government doesn’t want us to produce wheat for the nation, then we’re going to take care of our families as best we can,” he said. “The city people? Let the government worry about them. It has the money. We don’t.”

The Struggling Doctor Ruben Pluma Cruz, a 1985 medical school graduate of the National Autonomous University of Mexico, goes to work with a clean white smock and an air of professional authority.

But instead of a scalpel, his skilled hands wield a machete over a hot grill, serving poor man’s lunches in the central square of Iztapalapa, on the edge of Mexico City.

Flicking his wrist, he slices up pieces of sizzling cow tripe, slides them onto a corn tortilla, sprinkles them with cilantro, salt and lime juice, ladles on some red chili sauce and folds the concoction into a taco.

Each customer pays 33 cents. In a good week, Pluma and Erlinda Alvarez, his wife and business partner, can take home nearly twice the $58 he once earned as a doctor in a government clinic.

“We live a dignified life,” he said with a trace of bitterness. “Just like the engineers and accountants who drive taxis and buses. Did you know that a driver on (bus) Route 100 makes more than a doctor?”

There are just 104 hospitals for Mexico City’s 18 million people. But as the government streamlines itself, thousands of doctors and other skilled public servants are being laid off or squeezed out by stagnant salaries. Many, like Pluma, have joined an internal brain drain into the ranks of the capital’s 200,000 unlicensed street vendors.

The 41-year-old taco salesman consoles himself with the idea that he’s between medical jobs, waiting for a better offer. But it’s been more than two years since he quit his last one. To stay in practice he runs a modest pharmacy and sees a handful of patients at his home four days a week.

The serious money comes Wednesdays, Saturdays and Sundays--the days Iztapalapa’s center turns into an elbow-to-elbow outdoor market. Pluma and Alvarez rise at 6 a.m., leave their four school-aged children in a neighbor’s care and shop for supplies in their 1981 Dodge Dart.

By 10 a.m. their stand is open--a grill fueled by a metal gas tank and covered by a plastic lean-to. After 10 hours of selling tacos and soft drinks, they peddle leftover cooking grease to a soap factory.

Their taco sales are diminishing as others leaving salaried jobs saturate the market. By early 1990, the central square had become so crowded that city officials, embarrassed by such evidence of unemployment, began harassing the unlicensed vendors. Some mornings the vendors arrived to find piles of manure where they usually set up stands.

After police finally evicted them, Pluma and 200 fellow members of a vendors union protested by standing outside the Municipal Assembly building and stripping to their underwear. The city backed down.

“It won’t be easy to get us out of here unless they give us work,” Pluma said.

President Salinas has offered hope on that score by promising to build hospitals. Pluma calls him a good president “who cares about the people” and is trying to undo the damage of three consecutive “bad governments.” But he is angered by the corruption that hasn’t stopped.

“The bribe-taking, the thievery--it’s killing the country,” he said. “It’s reflected in the low salaries the government pays.”

* ABOUT THIS SECTION

The principal writers for this special report on Mexico were Marjorie Miller and Juanita Darling of The Times’ Mexico City Bureau, and Richard Boudreaux of The Times’ Managua Bureau. Don Bartletti, of The Times’ San Diego Edition, took the photographs.