Not many companies can claim to have had their products in Buckingham Palace, a Las Vegas casino and German brothel.

Hugh Mackay Carpets has done just that, as Business Correspondent Jonathan Jones finds out.

IT conjures up quite a picture to imagine the Queen sat in her bedroom at Buckingham Palace discussing carpet samples.

And few can claim to have had that honour, unless they work for Hugh Mackay Carpets, based in Meadowfield, on the outskirts of Durham.

Buckingham Palace and the Tower of London are among the buildings to have been carpeted by the company, which is celebrating 100 years in business this year, having held a royal warrant since 1972.

At the opposite end of the spectrum, the company has been called upon to make a carpet with the image of a naked woman bordered by penises woven into the pattern.

Since it was established in 1903, it has designed and produced carpets that grace some of the world's most prestigious buildings, including Buckingham Palace, Sandringham and St James's palaces, the Library of Congress in Washington DC, the Houses of Parliament, Tower of London, the world-famous Caesar's Palace casino, in Las Vegas, US, and the Sultan's Palace, in Oman.

It is currently producing carpets for the Chicago Hilton Hotel and a range of cruise ships being built by Japanese firm Mitsubishi.

It even created a keyboard style carpet, in the hope that it would attract the attention of Sir Elton John. It already counts rock star Liam Gallagher among its customers.

British wool, sourced in Yorkshire, is used to make all of the carpets.

Despite all this success, it has been a tough past five years for the company, with the growth of laminated flooring and bare floorboards endorsed by television shows such as Changing Rooms.

The company's chief executive, Steve Cowie, said: "The entire carpet industry has been hit by the growth in the trend for laminated flooring and sanded floorboards, endorsed by DIY shows.

"However, that trend appears to be changing, with an increasing trend, particularly over the past 18 months, to return to carpets.

"The good thing about laminated flooring is that it can be carpeted over as fashions change, which is obviously encouraging for us.

"We now produce carpets in subtle decorator shades to reflect the trend for understated and textured floor coverings, which seem to have been the trend over the last 15 years."

Hugh Mackay Carpets has also been instrumental in the formation of the Carpet Foundation to put forward the merits of carpets, as the industry looks to fight back.

That has been further helped by the introduction of a public relations campaign aimed at winning back customers.

Mr Cowie said: "The campaign is crucial to demonstrate the vast array of textures, colours and designs available. A carpet can actually enhance the understated, modern look that many householders are keen to create."

As a result, the company is hoping to take up some of the spare £150m capacity for carpets, caused by the closure of many former manufacturers, arguably caused by the growth in popularity of wooden floors.

Hugh Mackay itself has not escaped unscathed, as Mr Cowie admitted.

He said: "We have had to lay off around 50 staff in the last year, taking our numbers to around 180.

"Despite the job cuts, carpet manufacturing remains labour-intensive, and we are currently in a recruiting phase, trying to bring new blood into the industry."

The future of the business was never in doubt, but its current centenary year is still seen as a milestone.

Malcolm Anderson, the firm's retail director, said: "As well as being a cause to celebrate, our centenary year marks a significant point in the company's on-going development.

"After a century in business, we remain at the cutting edge of the industry, implementing the latest technology to service our retail, contract and export client base.

"We recognise the need to present the services we offer to a wider audience, in order to ensure our growth in the future."

One such service is bespoke carpet design, ensuring the carpet in your home is one of a kind.

The business has its own design studio, employing a team of designers who can give customers exactly what they require, even down to having a representation of their face, or their initials, woven into the carpet.

Mr Anderson said: "Despite some difficult times for the industry, carpets are making a comeback, and Hugh Mackay intends to be at the forefront of that rise."