CANANEA, SONORA (6/15/99) -- In the mile-high mountains of the Sonora desert, just 25 miles south of the border between Arizona and Mexico, over two thousand miners have been locked in a bitter industrial war since mid-November. Here Grupo Mexico operates North America's oldest, and one of the world's largest copper mines -- Cananea -- in a town which has been a symbol of anti-government insurrection for almost 100 years.

On November 19, the Cananea mine was paralyzed by a strike over its owner's plans to eliminate the jobs of 700 of its 2070 blue-collar employees. Pushing the cuts in employment is a government policy of privatizing Mexican industry, downsizing its workforce in an effort to increase investment incentives. The strike in Cananea directly challenged this policy, defying Mexico's government and one of its wealthiest financial backers.

In mid-February, government threats of armed intervention forced workers back to their jobs. In the strike's wake, one of Mexico's oldest unions -- Section 65 of the Miners and Metallurgical Workers Union of the Mexican Republic -- may have been broken, and its leaders blacklisted.

On February 13, miners went to their job sites in the vast pit, to hold them against the threat of possible replacements. Meanwhile, four convoys of Mexican soldiers began moving toward the town. Over 300 heavily-armed members of the state Judicial police took over the streets.

With violent confrontation in the air, local union president Manuel Romero, Cananea mayor Francisco Garcia and police and army officers, entered the mine. They walked from installation to installation, appealing to the miners to leave. Fearing the prospect of armed battle, the workers finally gave up their occupation and ended the strike.

In the days that followed, however, over 120 strike leaders were turned away at the mine gates, as they tried to report back to their old jobs. Hundreds more were permanently laid off and their jobs eliminated.

The spark which provoked the recent strike was a company announcement that it would lay off 435 workers permanently, closing four mine departments. Grupo Mexico's copper mines account for over ninety percent of production in Mexico, which is one of the world's ten largest producers. When the company took over the Cananea mine in 1991, in partnership with the American Smelting and Refining Co., its workforce numbered over 3300. In six years, the mine workforce was reduced by 1300 jobs. Meanwhile, production increased dramatically, from 30,000 tons of ore per day in 1979 to 80,000 tons last year.

Striker Javier Canizares says that these job cuts were accomplished when the company subcontracted construction and maintenence operations. "Instead of performing those jobs with its own workers, two U.S. companies, Road Machinery and Allison Parks, have brought in hundreds of workers under temporary 28-day contracts from southern Mexico," he explained.

Subcontracting undermined the union and undercut wages. Section 65, the Cananea miners' union, has a militant reputation, and their wages have averaged among the highest of the country's industrial workers -- between $8-12 an hour.

Gabino Paez Gonzalez, a Grupo Mexico executive in Mexico City, confirmed that subcontractors now perform many operations with contract employees. Under Mexican law, workers don't achieve permanent employment status and union rights until they have been on the job for 30 days. At Cananea, their wages are only a fraction of the permanent employees they replaced.

While Cananea is just a small, dusty border community of 30,000 residents, it occupies an almost mythic place in the iconography of the Mexican Revolution. Copper has been mined continuously here since the days of the Spanish viceroys in the late 1600s.

In 1906, the mine's US owners paid a lower salary to Mexican miners than they paid to white supervisors brought down from the north, the so-called "Mexican Wage." Cananea miners went on strike, demanding 5 pesos for an 8-hour day, and an end to the lower salary. After they were attacked by Arizona vigilantes, workers took up arms and were bloodily put down by then-dictator Porfirio Diaz.

In Mexican public schools, children learn of Cananea as the opening gun of what became the Mexican Revolution.

For years after the 1906 conflict, the Cananea mine belonged to the US-based Anaconda Copper Company. In 1971 the mine was nationalized. Two decades later, after the Mexican government began adopting economic reforms bent on attracting investment, Cananea was sold to Grupo Mexico, one of the country's largest industrial corporations. Jorge Larrea, its main shareholder, heads one of the country's wealthiest families.

Larrea's industrial empire grew rapidly through his close friendship with past-President Carlos Salinas, who signed the NAFTA treaty in 1994. Under Salinas, the Mexican government sold Larrea the Cananea and other copper mines, as well as railroads and other heavy industrial enterprises, often at a fraction of their book value. He is presently negotiating the concession to operate the Pacific coast port of Guaymas.

Thirteen Mexican financiers became billionaires during the Salinas administration. Larrea was one of them.

The enterprises acquired by Grupo Mexico have been rocked by conflict over demands for drastic job cuts. In 1997, Larrea bought the 6,521-kilometer Pacific North railroad, in partnership with Pennsylvania-based Union Pacific. Last summer, workers throughout northern Mexico mounted a series of rolling wildcat strikes over plans to reduce its workforce of 13,000 by more than half.

Gema Lopez Limon, professor at the University of Baja California in nearby Mexicali, concluded that "our government and corporations are using privatization to do away with unions entirely, as they've sought to do with the railroad workers, and now the miners here in Cananea. For unions to survive here, they will have to be much better organized, and seek greater international support."

Her conclusions reflect the worsening conditions of Mexican workers under the impact of two decades of neoliberal economic reforms. During that time, the income of workers has lost 76% of its purchasing power, and the number of Mexicans living in poverty has risen from 20 to 30 million. While the government estimates unemployment at less than 6 %, Mexico's new independent union federation, the National Union of Workers (UNT), puts it at over 9 million people, or a quarter of the workforce.

Despite the existence of a national health care system, almost half of the country's workers are not covered by it, due to the growth of "illegal" jobs. Companies which, despite the law, pay less than minimum wage, with no taxes, health insurance or retirement benefits, are now estimated to employ over half the workers in Mexico. Meanwhile, inflation continues to rage at 20% last year, while the government offered only a 14% increase in the minimum wage to compensate for it.

Over the last decade, the number of national enterprises sold off to private investors has grown tremendously, and their job reductions have added to this problem. Cananea and the railroads are only a few among many leaner, privatized concerns, including airlines, banks, railroads, mines and extractive industries, and many industrial enterprises.

As privatization moves from industry to industry, unions have been gutted. While three-quarters of the workforce in Mexico belonged to unions three decades ago, that percentage is now less than 30. In the the state-owned oil company, PEMEX, union membership still hovers at 72%. But when the collateral petrochemical industry was privatized over the last decade-and-a-half, the unionization rate fell to 7%. New private owners like Larrea reduced the membership of the railway workers union from 90,000 workers to 36,000 in the same period.

The section of the Mexican economy which has grown, of course, has been the maquiladora sector, still concentrated along the Mexico/U.S. border, but spreading to zones throughout the country. Almost a million workers are now employed in over 2000 factories, owned by foreign investors interested in low wages and unenforced protections for workers and the environment.

In Tijuana, the average maquiladora daily wage is about 50 pesos, while a gallon of milk in the supermarket costs about 20. In other words, a worker has to work almost half her shift for just the milk needed by her children. Under the impact of price decontrol, the prices of all basic necessities, including gasoline, electricity, buses and taxicabs, tortillas and milk are rising drastically.

But poverty along the border doesn't go unchallenged. From Matamoros on the Atlantic to Tijuana on the Pacific, labor unrest is increasing. One of the highpoints has been the two-year battle by workers at Tijuana's Han Young factory, who have challenged the system of low-wage, protection contracts operated by an alliance of government-affiliated unions and the maquiladora owners associations. They launched the first legal strike by an independent maquiladora union last May 14.

Since then, government authorities have been unrelenting in their efforts to declare the strike illegal, remove the bargaining authority of the October 6 Union for Industry and Commerce, and have repeatedly arrested its general secretary Enrique Hernandez and its lawyer Jose Peņaflor Barron. On May 3, following a decision by Baja California's highest court upholding its legality, the strike flared up again and has been raging since.

Despite efforts by city authorities to keep the independent union effort from spreading, workers at other Tijuana factories have begun to join it. Increased labor turmoil is also changing the city's political landscape, benefiting primarily the leftwing opposition Party of the Democratic Revolution (PRD).

"The arrest and harassment of Hernandez and Peņaflor indicates that the Tijuana labor board, the association of maquiladora owners, and Mexican state and federal authorities fear the labor and political situation are getting out of their control," explained Mary Tong, director of San Diego's Support Committee for Maquiladora Workers.

Last summer, in the midst of growing labor strife, PRD candidates in Tijuana's municipal elections campaigned seriously for the votes of maquiladora workers. Thousands of party flyers were distributed calling for raising factory wages, for child care for the mostly-female workforce, and for free transportation to and from work. These work-related issues were linked to demands for basic city services in the barrios, including housing, water, electricity, paved streets and sewers. The party's mayoral candidate, Jesus Ruiz Barraza, rector of the University of Tijuana, spent $300,000 on the campaign.

PRD support increased dramatically. While the party won only 10,000 votes in Tijuana in 1992 and 1995, on June 28 it received 25,800, or 9.5% of the total votes cast. While the PRD was nevertheless denied any of the city council's 14 seats by a last minute electoral "reform," it did succeed in capturing municipal positions in other border cities nearby. The party went on to capture the governorship of Baja California Sur, just to the south of Baja California Norte, in which Tijuana is located.

Of Mexico's 10 million permanently-employed workers, one million work in the border factories, and 200,000 in Tijuana alone. Increased voter participation by maquiladora workers could prove crucial in Mexico's national elections in the year 2000. "Last June we just had a temporary plan," says Hernandez, who used to head the party's state organization in Baja California. "But if the movement among maquiladora workers grows, by 2000 we could win tens, or even hundreds of thousands of new votes."

The close relationship between border authorities and the maquiladora managers was further challenged this fall when Mexico's new independent UNT labor federation organized a chapter in Baja California. The new federation has begun to challenge fundamental government economic policies. When Mexican President Ernesto Zedillo offered workers a 14% increase in salaries to compensate for inflation, the UNT demanded 22%.

At the beginning of June, the October 6 union and others affiliated to the UNT conducted a plebescite for Tijuana maquiladora workers over wages and working conditions. In balloting in the neighborhoods surrounding the plants, workers were asked if they would favor a new minimum wage of 100 pesos daily, and if they would stop work to get it. Despite heavy police presence in the areas surrounding the makeshift polls, over 5000 workers voted in Tijuana, Tecate, Ensenada and Rosarito, approving the proposal almost unanimously.

These developments threaten increased labor costs for U.S.- and other foreign-owned factories along the border, and are viewed with alarm by Mexican authorities. "We are rejecting government policies which use low wages to attract foreign investment," Hernandez declared.