The late 1960s and 1970s were a time when products made from Icelandic wool were very popular, including jumpers, coats, gloves, hats, and rugs and carpets. The most important markets were Europe and North America.
Demand for wool products continued to grow and Álafoss, as a major producer and exporter of Icelandic wool, entered into partnerships with several sewing and knitting factories in Iceland. These included Prjónastofan Katla from Vík.
Prjónastof Katl’s company, which began operations in March 1971, had 114 shareholders. The largest of these were: Sýslusjóðurinn, Hvammshreppur municipality and Kaupfélag Vestur-Skaftafellsýslu. The large majority of co-founders were individuals from Vík.
Prjónastofan Katla’s cooperation with Álafoss as a monopolist in the foreign market, especially the American market, consisted in Katla buying raw material and then selling finished products to Álafoss. One of the conditions of the collaboration was that Álafoss would design the majority of the products. However, it is worth noting that some of the designs were also developed by Katla itself. Most of the products were shipped abroad, mainly to the United States and European countries. Only 10% of Katla’s products went to the domestic market.
The knitting factory in Halldórsverslun employed about 25-30 people. Every year 60-70 models of clothes were sewn in hundreds of thousands. The number of jumpers produced daily reached 100. In addition to jumpers, jackets and coats were also produced.
A new stage in the development of Prjónastofan Katla was the cooperation with a Russian contractor in 1979. Since then, Russia has become the main target market. In addition to adult clothing, children’s clothing was also sent there. In the early 1980s, the company invested in buying new production machinery. As the production volume increased, the production hall and sewing room were moved to Brydebúð, a larger building that was one of the oldest in Vík, in 1981.
This investment proved unsuccessful as the demand for wool products in foreign markets, especially the American market, continued to decline significantly. The unfavorable economic situation in the knitting sector led to systematic indebtedness of Prjónastofan Katla and eventually to its bankruptcy. In 1985, one of the largest companies in Vik and Myrdal was closed, which resulted in 30 people losing their jobs. It was a crisis situation for the village, as every seventh inhabitant of the municipality became unemployed.
Gæði Knitting Company Ltd. was founded in July 1986 following the bankruptcy of Katla Knitting Workshop. With the assistance and involvement of The Icelandic Regional Development Institute, along with Mýrdalshreppur municipality, the Gæði Knitting Company Ltd purchased knitting machines, equipment, and existing stock from the previous company and started business activities in the same building – Brydebúð.
In the first year of trading the company had 10 employees, which subsequently increased to 23 employees in 1990, of whom 9 were part-time workers.
Most of the staff attended basic courses in the clothing and textile industry, and a few continued with further training and specialization in Germany.
Gæði’s Managing Director was Sigurður Guðjónsson. When he retired, Auður Axelsdóttir took over the position as Managing Director.
During the first years, Gæði’s products were mainly made from pure Icelandic wool. After a decline in demand from foreign markets for wool products sales fell sharply in 1988 and 1989.
In order to address this problem, sweaters and small items were produced from cotton. In 1989 over 50% of the company’s manufactured goods were made from cotton. 70% of all production was exported overseas. Gæði’s main contractor at that time was a Russian company. A part of production was also sent to Ásblikk plc company in Reykjavik.
After five years of operations the Gæði Knitting Company Ltd filed for bankruptcy in the autumn of 1992. High transport costs and high energy prices were contributory factors. Mýrdalshreppur council acquired Gæði’s manufacturing machinery and equipment after the bankruptcy.
