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Stars and stripes sell, especially when the America in question is marketed by an internationally known crafts cooperative that is making its mark in Japan.

In August, Watermark Association of Artisans received its single largest order, moved from its original digs in Elizabeth City's old train station to a newly built, 10,000-square-foot facility, and clinched a $40,000-a-year contract with a Japanese distributor.The owners, Carolyn and George McKecuen, say they noticed the patriotic trend in the craft industry at a craft trade show in Atlanta last July. Of the 400 Watermark products shown there, the few done in red, white and blue accounted for the biggest proportion of the total sales.

``We came back to Elizabeth City from that show and asked all of the craftsmen to try putting red, white and blue and stars and stripes on everything!' Carolyn McKecuen said.

Sales figures show the strategy worked, and after recent developments in the Persian Gulf, Debi Peterson, a member of the 12-year-old member-run cooperative, suggested the group design a collectible to be sold to raise money for troops sent overseas.

The result: a hand-carved wooden camel sporting the colors of the flag and the message, ``God Bless America.' The camels retail for $20; proceeds go to the Navy Relief Fund.

Orders for the colorful camels have rolled in from individuals and some of the more than 500 retail shops nationally and internationally that buy from Watermark.

These gulf crisis collectibles ``were the answer we came up with to everyone's question right now, 'What can we do here for the people serving overseas?' ' McKecuen said.

That attitude, coupled with a flexibility to create new designs almost overnight, help explain why Watermark is able to bring the unprecedented sum of $650,000 yearly into the area economy in salaries, member wages and operating expenses.

While the nation's economy teeters on the brink of recession, Watermark posted a 32 percent increase in sales at the end of 1989.

Two years after its start in 1978, Watermark operated on the same break-even basis, subtracting only administration and marketing costs from its members' earnings, but it was $60,000 in debt.

Carolyn McKecuen, a potter who sometimes sold through the co-op, persuaded the board of directors to market crafts to wholesale buyers, backing up the work with prompt delivery and high-quality goods.

The success of the decisive move garnered McKecuen one of the Ms. Foundation of Women's first Gloria Steinem awards in 1989. It also cast the Watermark Association as a state-of-the art model for creating economic opportunities for unskilled workers in rural areas.

McKecuen believes such opportunities are as necessary today as they ever were.

``We advertised for help in our new warehouse at a salary of a little above minimum wage, expecting to interview a few people,' she said. ``We got 68 replies for that job. And I'm seeing more male interest in our training from men who have recently been laid off.'

The 430 current members of Watermark, like the original 35, are still mostly low-income; 97 percent are female.

``I've always emphasized to customers that our members must receive at least minimum wage for their work, and now we try to set that minimum at $5 an hour, even though wholesalers can buy similar crafts from China or Taiwan, where people are paid pennies for their labor,' she said.

Now, when the co-op isn't doing battle with America's foreign competitors, it's selling to them. Watermark's contract with Tsumura Pyxis International Ltd., a Japanese distributor, will allow the co-op to continue its relationship with four of that country's most famous department stores while reaching many more outlets. The first order from Tsumura Pyxis was for 1,582 items.

But even the confusion of moving into a new building failed to delay the timely shipment of the Japanese order, and training classes in such crafts as basket design and woodwork continue unabated upstairs at Watermark's new address on U.S. 158 in Camden County.

Representatives from the U.S. Department of Agriculture will be guests at Watermark's opening ceremony Saturday. The USDA was instrumental to Watermark in imparting the fundamentals of cooperative business in its early days.

Through the years, funding for the Northeastern Education and Development Foundation, the non-profit organization that disseminates the fruits of Watermark's own experience through local, national and international training and internship programs, has come from the Office of Community Services, the North Carolina Rural Fund for Development and the Z. Smith Reynolds Foundation, among others.

George McKecuen, who oversees NEED, thinks cooperative development efforts such as the ones he and his wife manage will fail if they lack the ability to recognize their own weaknesses and approach the appropriate agencies and benefactors for help.

The Ford Foundation in New York is considering funding for a separate facility next to Watermark to house NEED and has expressed interest in George McKecuen's latest project, the NEED Micro-Enterprise Loan Fund.

Based on a system used in the rural markets of Bangladesh, a test group of five small-business owners with little or no capital would borrow from a revolving loan fund. The group oversees the implementation of each business plan. When two of the members repay their loans, the next two receive funding, and so on.

Though business conditions and practices in Bangladesh and northeastern North Carolina differ, the loan fund project has shown early promise. And because it fulfills Watermark's original objective of helping local people, the program should become part of the co-op's plan for what the McKecuens term ``manageable growth.'

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