Special Report:If Monterrey Falls, Mexico Falls

Sitting in his air-conditioned office looking across at sparkling office blocks dotting the mountains on that morning in January, he casually deleted the email as spam.

Six days later, the phone rang and a thickset voice demanded the money. Ramos panicked, hung up and drove to his in-laws' house. It was already late and he had little idea what to do. Then, just after midnight, masked gunmen burst onto his premises, set fire to one of his trucks, shot up his office windows and sprayed a nearby wall with the letter "Z" in black paint, the calling card of Mexico's feared Zetas drug cartel.

"They were asking for money I could never afford," said Ramos by telephone from San Antonio, Texas, where he fled with his family the next day. "I should have taken the threat more seriously, but it was such a shock. I couldn't quite believe this could happen in Monterrey."

In just four years, Monterrey, a manufacturing city of 4 million people 140 miles from the Texan border, has gone from being a model for developing economies to a symbol of Mexico's drug war chaos, sucked down into a dark spiral of gangland killings, violent crime and growing lawlessness.

Since President Felipe Calderon launched an army-led war on the cartels in late 2006, grenade attacks, beheadings, firefights and drive-by killings have surged.

That has shattered this city's international image as a boomtown where captains of industry built steel, cement and beer giants in the desert in less than a century -- Mexico's version of Dallas or Houston.

By engulfing Monterrey, home to some of Latin America's biggest companies and where annual income per capita is double the Mexican average at $17,000, the violence shows just how serious the security crisis has become in Mexico, the world's seventh-largest oil exporter and a major U.S. trade partner.

Almost 40,000 people have died across the country since late 2006, and in Monterrey, the violence has escalated to a level that questions the government's ability to maintain order and ensure the viability of a region that is at the heart of Mexico's ambitions to become a leading world economy.

CAUTIONARY TALE

Already drug killings have spread to Mexico's second city Guadalajara and while Mexico City has so far escaped serious drug violence, the capital does have a large illegal narcotics market. If the cartels were to declare war on its streets, Monterrey's experience shows that Mexico's long-neglected police and judiciary are not equipped to handle it.

"If we can't deal with the problem in Monterrey, with all the resources and the people we have here, then that is a serious concern for the rest of Mexico," said Javier Astaburuaga, chief financial officer at top Latin American drinks maker FEMSA, which helped to spark the city's industrialization in the early 1900s.

Lorenzo Zambrano, the chief executive of one of the world's largest cement companies Cemex, is equally concerned. "The trend is worrying," said Zambrano, whose grandfather helped found the Monterrey-based company that has become of a symbol of Mexico's global ambitions