This week international textile manufacturer Johnstons of Elgin will opens its new Cashmere Vistor Centre which marks ''the end of the new beginning'' rather than the beginning of the end which looked likely a year ago.

There was an air of optimism and contentment in the firm which was celebrating its 200th birthday. Its order book was full, it was keeping to the delivery dates it had promised its customers in 50 countries around the world, and it had just completed an eight-year and #8m investment programme which gave it state-of-the art equipment.

Then, in the space of two hours, its success looked like being washed away. The worst floods in living memory hit Moray and in the early hours of July 2 the site on which Johnstons has operated since 1800 was submerged.

''It was absolutely staggering to come in that morning and find four feet of water right throughout the mill,'' said managing director James Sugden.

''We had no telephones, no power, nothing. Everyone was in a state of shock.

''Our entire plant was brand spanking new and we were at a mature stage where we could almost sit back and say we were not going to spend any more capital on plant. We were exactly where we wanted and we were humming along finely tuned and then we were absolutley wiped out.''

At the busiest time of the year the privately owned company had lost half its finished stock, all its records and its autumn 1998 designs were destroyed among the floating computers, furniture and beautiful cashmere garments.

Johnstons is Elgin's biggest employer but it called a mass meeting and quickly allayed the job fears of the 350 staff it regards as its biggest asset.

''From the word go we dismissed any thought of closure or relocation,'' said Sugden. ''We wanted to get back into business at Newmills as quickly as possible and this week's re-opening of the shop and visitor centre is marking a milestone in the recovery.''

Johnstons had to completely re-equip with the help of an insurance payout of more than #20m, but had to wait nine months for the delivery of some specialist machinery. It managed to obtain weaving machines in four months, but until they arrived, the weaving had to be done in other mills.

''We have another factory in Hawick and it is dependent on us for the yarn supply of cashmere,'' Sugden said. ''Fortunately its business was hardly affected because all our suppliers rallied round and we were able to make very quick alternative arrangements.

''In the key months of July, August and September, Hawick, which has 150 employees, was able to generate normal business and in fact it exceeded its budget which generated vital cash flow for us.''

Johnstons flew its international customers into Elgin to show them the devastation and to negotiate revised schedules.

''We stuck our necks out and said we would be able to produce and replace most of what was on order by the end of September which gave us 12 weeks - and we did. Obviously the variety of goods offered to some businesses were lost but because Johnstons is a brand people want and because we were able to give them honest information most of them have stuck with us.

''Obviously the loyalty factor is very strong although I am not saying there were not some very difficult times with our customers around the world.

''More than 50% of our production is exported and we were determined to keep as many customers as possible happy because the textile market is not an expanding one.

''We see Johnstons as being in a niche market, and there is a good business there, but it is all about quality, price, design and service and the service element we were offering before the flood was severely disrupted.

''It tested loyalty, tested customers and tested our management and all have come through with flying colours.

''If business was meant to be easy you wouldn't need management.

''We recognise all the problems of the Far East crisis, high sterling and so on but these are factors you have to counteract. While the news of Dawsons' problems is of real concern to the industry the small independent manufacturers are still managing to carve out an honest, productive and profitable niche and some markets are actually expanding.

''We have increased our business in Germany, France, Italy and the States which is remarkable when you look at what happened a year ago and at the situation generally.

''Profit margins have obviously been affected because we are in the business for the long term and we have costed our current business at levels which do not reflect the high level of the pound.''

This year's sales are expected to dip 10% from the 1997 level of #27m as a result of disruption caused by the floods, but Sugden reckons they will make a full recovery in 1999.

Johnstons is used to overcoming problems which can start with difficulties in obtaining raw cashmere wool from remote ares of Asia. Sugden believes one of the firm's strengths is that all its shareholders work in the business and take a long-term view.

''We have had problems before,'' he said. ''We had the Yom Kippur War, the Kobe earthquake, the Gulf War. There are always extraneous events which come along and knock companies off their perch and you just have to be ready to be knocked off and then climb back on again.''