NICHE markets have helped Britain's biggest quality flags manufacturer to buck the trend and keep the business growing.

AA Flags in Consett, County Durham, saw turnover increase by 12 per cent last year, despite major upheavals in the market.

A flood of cheap imports from China, and the rise of digital printing, spelled the end for many sewn flag manufacturers in 2004.

AA Flags survived by diversifying and filling gaps left by the demise of the North-East textile industry. Along with its traditional orders of flags for golf clubs and huge banners for football supporters, the 16-strong workforce produces goods from leather bean bags to horse blankets and hairdressers' aprons.

Mandy Scott, 36, who founded the business in 1992, said: "We had quite a difficult 2004, because of cheap imports from China.

"It meant a lot of flag producers went under last year."

"They have got much better at what they do, and a flag I would sell for £50, they can make for £3. I cannot even buy the material at that price. Blue-chip customers who used to come to us are buying in bulk from China now."

AA Flags is focusing on one-off orders and leaving the Chinese to produce high volumes.

"We have concentrated on service and quality rather than price," she said. "The business is thriving and we are busier than ever."

Other sidelines include backdrops for touring bands, with punk veterans Stiff Little Fingers among recent customers.

Ms Scott started out on her own, making flags in the basement of her home in Blackhill, Consett. It has grown to become the biggest firm of its kind in the UK and last year turned over more than £500,000.

"We have always tried to grow the business by 10 per cent a year and have never had a downturn in 13 years," she said.

In order to stay a step ahead of the competition, the firm has sent four of its staff on the eQ8 pilot training project, run by Business Link County Durham.

Ms Scott said: "We have to keep improving our performance all the time, in order to compete and keep the industry alive in this country. Developing the workforce is one way of doing that, as it is vital for me to retain trained staff. "

The employees will gain NVQ level two qualifications through the free scheme.