MEXICO : Progress and Promise : Culture : Pragmatic Monterrey Provides Model for Modernizing : Residents’ thrift was the butt of jokes for decades. Now they get the last laugh as their city turns into an economic powerhouse.

For decades, Monterrey residents have been the brunt of jokes by other Mexicans that poke fun at their thrift and dedication to making money. A glass of tap water was called a Monterrey cocktail. How do you get 20 regiomontanos --as people here call themselves--into a Volkswagen bug? Toss in a peso.

Other Mexicans look down on the city’s climate--blazing hot in summer, snowy cold in winter and ravaged by hurricanes that find their way inland from the Gulf Coast in the fall.

But today, Monterrey is doing the laughing as the rest of the nation tries to discover the secret of how 2 million regiomontanos --2.5% of Mexico’s population--produce 12% of the country’s goods and services.

Monterrey has become an industrial metropolis on a par with Chicago, Sao Paulo or Milan. It is considered a model for Mexican modernization despite evidence that progress is leaving many of its residents behind.

Graduates of the Monterrey Institute of Technology--fondly called El Tec by everyone from the rector to cab drivers--run the country’s most successful companies and a growing number of state governments. The Productivity Center of Monterrey uses a locally developed data base and computer model to advise companies across Mexico on ways to improve their efficiency.

Both El Tec and the Productivity Center were established by the local business community, funded with voluntary assessments. El Tec now has 25 satellite campuses across Mexico. And as corporations based here open subsidiaries in other parts of the country, they set the national standards for employee benefits and training programs.

Monterrey companies are aggressive exporters. The largest make more than half their money outside Mexico and already plan their business around the North American market that the continent’s governments are trying to create with a free-trade agreement.

Eduardo Garza, chairman of capital-goods maker Frisa, typifies the entrepreneurial spirit that is Monterrey. He says he realized after a 1983 vacation in East Asia that Mexico would soon have to open its borders and compete in the world economy.

“Asians started focusing on the international market 20 years ago, and now they are prospering,” he said. “I knew then it was a mistake to concentrate on the domestic market. When I got back, we started to export.”

Now the company sells 80% of its production in the United States, Canada, Europe and Venezuela.

“Monterrey was the first city to acquire an industrial profile, not only in Mexico but also in Latin America,” said historian Abraham Nuncio. “It produced what today is called modern. In the new scheme, the all-powerful state that interfered in society and trade is beginning to disappear. The new watchword is neo-liberalism. Monterrey should rise to the top because here, since the 1930s, business people have had a classical liberal mentality, more society and less state.”

That mentality extends to officials such as former Monterrey mayor and newly elected Nuevo Leon state Gov. Socrates Rizzo. “The government’s role is to avoid hindering private initiative,”he said.

Regiomontanos take pride in being more direct and less solicitous to those in authority than most Mexicans.

“In the south, form is more important, people are baroque. Here what is important is substance,” said Santiago Roel, director of modernization for the state government.

“People here are even economical with their words, because time is money,” remarks Rizzo. They also “place importance on education--not as cultural window dressing but as a productive investment.”

Monterrey even looks different. From the smallest village to sprawling Mexico City, Mexican towns are clustered around a plaza, a city block with a church on one side, a government office on another. But not Monterrey. In its center is a macro-plaza of fountains, modern sculpture and contemporary architecture.

The opulence of upscale Monterrey is notable, from the manicured lawns and striking houses in wealthy suburbs such as San Pedro Garza Garcia to the electronic billboards with rotating advertisements on the main throughway.

When regiomontanos try to explain why they are the way they are, they begin with their city’s history, which has always seemed to cast them as outsiders.

According to legend, Monterrey was founded in 1596 by conversos --Spanish Jews who had converted to Christianity but still feared persecution by the Inquisition that was gaining momentum 600 miles away in Mexico City.

Here, unlike in the south, there was no great Indian civilization to provide riches and slaves.

The town struggled between droughts and floods for the next 250 years, the inhospitable climate that regiomontanos say formed their municipal character. Then the U.S. Civil War provided opportunities for merchants less than 150 miles south of the border. While Mexican federal policy was to support the Union, Monterrey’s textile mills and trading companies grew rich smuggling goods to the Confederacy.

“The U.S. Civil War permitted the accumulation of capital that later financed other projects,” Nuncio said. Those projects included a now-defunct steel mill and the Cuauhtemoc Brewery.

“They caused the explosion of industry in the state,” said Santiago Clariond, president of Industrias Monterrey, an industrial conglomerate.

The Monterrey corporations also developed a distinctive labor policy, a paternalistic style that undercut labor unions affiliated with the ruling party. Companies offered housing and health benefits long before the government mandated them.

Business people claim they were ahead of the worldwide trend toward labor-management cooperation. But Nuncio, who published a history of the Monterrey companies, argues that they are really only an extension of the old hacienda, tying workers tightly to the patron. “That is not a modern system,” he contends.

Modern or not, the approach has kept labor strife here to a minimum.

The Monterrey business leaders were as resilient as they were enterprising.

“They survived the destruction of the old regime” during the 1910 Revolution, when Mexico’s landed aristocracy was overthrown, Nuncio said. “The families here are among the few in Latin America that have maintained an industrial dynasty.”

Although Monterrey’s great enterprises are now run by professional managers--mainly graduates of El Tec--their boards of directors are studded with descendants of the founders: Garza, Sada, Trevino and Zambrano. The old family names also dominate local politics.

Survival of the great industrial dynasties has given Monterrey stability and cohesiveness--as well as a wary attitude toward the revolutionary rhetoric of Mexico City politicians.

Instead of looking to Mexico City, said businessman Clariond, “we feel a strong identification with the United States.”

“For us, it is as easy to shop in San Antonio or Houston as Mexico City, so U.S. fashions get here first,” said Catalina Roel, a resident who runs a school for children with learning disabilities.

But the identification with its northern neighbor goes much deeper than shopping trips. The typical work day resembles the U.S. standard, beginning at 8 and finishing at 6, with a one-hour lunch. In the rest of Mexico, office workers arrive between 9 and 10, take a two- or three-hour lunch and do not go home until well after 8 p.m.

The city’s residents also take pride in its U.S.-style newspapers and claim their press is the most free in the country. The skyline is cluttered with satellite dishes that residents use to keep up on the latest U.S. television programs.

Regiomontanos are enthusiastic about the proposed North American free-trade agreement. “In central Mexico, there are still fears of the United States,” stemming from multiple invasions and the loss of territory in the last century, said Roel. “We do not have all that historical baggage.”

Some here contend that the city’s culture is so distinctive that it can never be transplanted to other parts of the country. And even if Monterrey is Mexico’s future, it is in many ways a troubling one.

“There is no place for the poor in Monterrey,” said Sister Marinela Madrigal, a member of the Sisters of Social Service order, who grew up here and returned in March after a 20-year absence. “The big, strong industrial groups are concentrated here. They need skilled labor that is not to be found in the ghettos. The future is going to be difficult for poor people. They are at the margin of the modernization process.”

An eighth-grade education is the minimum for factory workers here, and some companies require a high school diploma--even though the average Mexican nationwide has completed only the fourth grade.

Clinging to the mountainsides surrounding Monterrey are poor neighborhoods of dirt streets and concrete-block houses which stand in stark contrast to the mansions of San Pedro Garza Garcia. Then there are the nearby squatter camps where thousands of families live without running water, sewage, or electricity.

“Doesn’t 20 years seem long enough to do without sewers?” pleaded Maria del Carmen Espinoza, who raised her family in a cardboard shanty in one of those camps.

“For the poor, instead of stabilizing, the situation becomes worse,” said Sister Marinela Madrigal. “It gets to the point that people no longer have hope.”

One result is gangs and violence in the poorer neighborhoods that ring the city. “Last week, a 15-year-old girl was found raped and strangled,” the nun added. “Not a week passes that a woman is not killed.”

With such problems, Monterrey is also home to one of Mexico’s highest profile urban opposition movements, Tierra y Libertad, Land and Liberty.

“There was a need to create social organizations to channel people’s demands,” said Alfredo Anaya, a Tierra y Libertad founder and veteran of Mexico’s 1968 student movement. “People demanded housing, and public services and the state did not have the resources to supply them.”

Tierra y Libertad tries to tap into government resources, such as the widely publicized Solidarity social program, for day-care centers and other projects that members administer. The organization also provides legal advice on obtaining land titles and municipal services. The goal, Anaya said, is gradual social change.

The development that has taken place in Monterrey is unequal and unfair, he said. “People are being impoverished to an extreme degree,” he charged. “The level of opulence of the rich is insulting compared with the poverty of the rest of the people.”

Economic progress also clashes with political traditionalism. Despite the election of opposition mayors in two suburbs three years ago, regiomontanos say that for top offices it is politics as usual.

Rizzo is considered a modernizing governor. But given the continuing domination of the electoral process by the Institutional Revolutionary Party (PRI, by its Spanish initials) which has ruled the country for 63 years, he is considered a virtual appointee of the president. “They still send us the governor from Mexico City, the viceroy,” complained a local PRI member.

However, such complaints are made more with fatalism than fervor for change. Business’ main interest is that government leave it alone to stake out a place in the world economy.

“The North American free-trade agreement is a great opportunity, but it is not a solution,” businessman Clariond said. “It is a means, a road, a way to grow, a way--if we work hard--to achieve competitiveness and growth.”

And Monterrey’s entrepreneurs are convinced they must lead the way. As businessman Garza said, “Who else in Mexico is prepared?”

* 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.