Based in the heart of Northamptonshire's traditional shoe leather tanning towns, Strong & Fisher has weathered a deep depression in the world's leather industry to become arguably the top supplier of high quality lamb skins paraded on the catwalks by many of the leading fashion houses in North America and Europe.

Indeed, reversing the trend which decimated the European leather industry in the late seventies and early eighties, Strong & Fisher has just landed its first large scale contract with Japan.

At the core of Strong & Fisher's recovery from disaster is a new flow in the world's leather trade. Strong sells to the predominantly anonymous 'makers-up' who supply garments of specific design to the world's fashion houses.

By the late seventies, western aid to the Third World enabled many countries in the Far East, particularly India and South Korea, to take their lamb skins or cattle hides right through to manufactured items. And because these new indigenous industries operated with 'sweated' labour, cheap foreign goods flooded western markets and devastated domestic industry in Europe and North America.

In 1979, Strong & Fisher made pre-tax profits of just over £2.1m on a turnover of roughly £42m. The next year, turnover fell by approximately £3.5m, and the company plunged into the red with a massive £2.4m loss in profits.

Progress through the next two years was slow, and even in 1983, when Strong & Fisher returned to the black with pre-tax profits of £413,000, turnover was still down by just over £3m compared with 1979.

But over the last two years the company has gone from strength to strength. Turnover last year was a blistering £57.6m, with pre-tax profits up 53% at £4.24m. And on the basis of last week's interims showing pre-tax profits up by 8% at £2.1m, remembering the second half is always stronger than the first, Strong & Fisher is on course to fulfil brokers' hopes of year-end profits of £5.2m.

With the lean years now well behind it, Strong & Fisher today supplies high quality skins to those very same Far Eastern makers-up whose cheap leather garments flooded western markets in the early eighties.

This new flow of trade grew primarily out of a fundamental shift up-market in western consumer demand, although sterling's return to a more realistic level played its part. But Strong & Fisher deserves credit for grasping the opportunity by diversifying its product and moving up-market with the western, and now the world consumer.

Historically, Strong & Fisher was a one-product company - "the king of suede" is how managing director Richard Strong puts it. This is fine when suede is in fashion, but disastrous when it is not.

The need for a fundamental transformation of the company's business was abundantly clear by 1981, but the breakthrough didn't come until late the following year.

Admirably frank, Strong laments he: "Didn't react quickly enough to market forces. We should have cutback in 1981, instead we cutback in 1982. This is the main mistake I'd criticise myself for as a manager."

Biblical rhythm
Part of the problem was old habits of mind refusing to die. Strong & Fisher, and indeed the whole British leather industry had got used to the traditional, almost biblical rhythm of a year of plenty followed by a year of famine. "I've been in this business 27 years and overall we'd been making money and expanding", Strong explained, "then suddenly things go wrong; the immediate reaction isn't to rationalise, it is to try and ride the crisis out."

More importantly, Strong & Fisher just didn't have the new products on-line. The breakthrough here occurred in 1982 when "in-house brainpower" came up with a closely guarded method of tanning thinner skins which had their natural imperfections, such as wrinkles at the neck, rolled out. This proved crucial for the company's break-out into the wider high-fashion market which uses leather not merely in jackets, but as a fabric in dresses, blouses, shirts etc.

Strong & Fisher is extremely lucky with its workforce. Many of the technical managers have been with the company all their working lives, and traditional skills acquired over generations in the leather trade are crucial on the shop-floor where work involves the skilled grading and handling of skins over sueding, cutting or embossing machinery in what is essentially a low-tech industry.

And the point is not lost on senior management. Strong & Fisher operates an employee share scheme, and over the past two years has set aside £220,000 from profits to provide shares for every person who has been with the firm at least three years.

Not that Richard Strong is over-sentimental about long serving staff. He readily admits that one advantage of the lean years was a management shake-out which, by death or promotion, saw younger, more profit-conscious managers take up the reins. "Profit-consciousness is where the shake-out really transformed us. The attitude now is how can we make more money, instead of I've done very nicely, I've hit budget this week."

Overall control
The lean years also saw the arrival of John Hawksfield as finance director. This was the first time anyone in Strong & Fisher had overall control of the treasury function which, as John Olivier of stockbroker Laurence Prust stresses, is fundamental to a company which exports around 80% of its output.

With its skins being shipped all over the world, Strong & Fisher could easily fall foul of volatile or irrational exchange rate movements (as it did in the early eighties). So the company now hedges its currency exposures, which can include the European Currency Unit, through its main bank National Westminster.

The reason for all this is the new products rolled on to the high fashion market in November 1982. Strong said: "The new range of thin, soft leathers in new colours were sampled massively and received enthusiastically. They formed the base for turning the business back to profit because we got very good orders in early 1983 for the autumn which, in financial terms, was when the world was awakening and we were there with the right products."