Hazel Tindall cannot remember learning to knit but she is sure that it was before she could read or write. Among her earliest memories of growing up in post-war Shetland is going outside to check on her grandmother as she made her way down a hillside – the woman was almost 80, carrying a kishie of peat on her back, knitting as she went.

More than 50 years later, Tindall is still knitting. More than that, this petite woman with the salt and pepper hair, soft voice and sparking blue eyes has a unique claim to knitting fame – she is officially the world’s fastest knitter.

“I knitted 255 stitches in three minutes,” Tindall says almost bashfully of her triumph when we meet surrounded by hats, jumpers and scarves in the Shetland textile museum, a renovated 18th century house nestled among shipping containers and ocean liners along Lerwick harbour. That victory was in 2004. Four years later she defended her crown, in Minneapolis.

Behind Tindall’s gentle, Fair Isle cardigan-wrapped exterior runs a seam of steel as strong as any knitting needle.

The contest in the US was tightly regulated. All knitters used the same 5mm needles and 100 per cent wool. Knitting belts were not allowed. Over three timed sessions, Tindall knitted 262 stitches. Dutchwoman Miriam Tegels, who had disputed her Shetland rival’s 2004 win, came second.

“Technically I guess I’m still the world champion. They haven’t held a championship since,” says Tindall, above, with a smile. As we speak, she is perched on an old wooden chair with her knees pushed together, a pair of mittens silently forming on her lap. “My mother hated knitting but I always loved it.”

Shetland was long renowned for its knitters, and its wool, a soft yarn shaped by the harsh climate and biting wind. For years Shetland produced tweed and textiles to rival Harris in the Western Isles. On meeting Queen Victoria in 1837 Shetland entrepreneur and Liberal politician Arthur Anderson presented the regent with a pair of fine white lace stockings. There was no finer gift.

Shetland was dotted with textile factories well into the 20th century: Tullochs, Stuarts, Moats, the legendary Adies, the famous scions from which BBC journalist Kate Adie hails.

Then oil hit. Until the early 1970s, knitting was the only way Shetland women could generate income inside their homes, bartering what they made for goods and services. It was solitary, poorly compensated work. The oil boom brought new jobs for women, particularly in the burgeoning public sector. There was no need for knitting anymore.

In 1972, Tindall left Shetland for London. “When I came back 11 years later there was nobody knitting,” she says.

The textile factories were hit by the double whammy of falling labour and rising American import taxes. In 1955, Adies had 32 workers producing 88,964 yards of tweed; by 1982 there were just three employees and less than 5,000 yards of cloth. Shetland’s commercial knitting industry was gone forever, or so it seemed.

Four decades later, knitting is decidedly en vogue, celebrated in Guardian editorials and designer fashion. In Shetland, a new cohort is picking up needles in earnest for the first time. “We have lost a generation of knitters but some young ones are coming back to it,” says Hazel Tindall.

Among this new generation of

Shetland knitters is 24-year-old Ella Gordon, a graduate of the decade-old textiles course at Shetland College.

“When I was young you wouldn’t be seen dead in Fair Isle. The 1980s and 1990s were a real dip in Shetland,” says Gordon, who works at Jamieson and Smith wool brokers in Lerwick.

Then, around 2005, a local company began making Fair Isle hoodies. “All the boys started wanting them.”

In the decade since, demand for Shetland wool has grown, both on and off the island. “But the struggle is trying to get people to do it,” says Gordon.

Costs are a major factor. Even for a knitter with the alacrity of Hazel Tindall, a single jumper could take upwards of 60 hours to produce. That works out at a fraction of the minimum hourly wage on an island where incomes are substantially higher than the Scottish average. Little wonder Gordon “is the only person out a class of 30” at primary school “that is doing anything with knitting”.

Jamieson and Smith handle some 80 per cent of Shetland’s wool at their Lerwick premises. The ground floor, a renovated church, stocks hundreds of different types of yarns, all neatly divided by colour and weight for knitting aficionados. Downstairs, in what was an old police station, is a different story; bail upon bail of freshly sheared fleeces balance precariously on the stone floor, the air is thick with the smell of lanolin.

“We take the wool, we grade it, then we sort it,” explains Oliver Henry, managing director of Jamieson and Smith. For almost 48 years, Henry has been separating the soft “kindly” wool, from the harsher guard hair, which bears the brunt of the unforgiving Shetland weather.

In that time he has seen Shetland’s woollen industry shrink dramatically before slowing returning to life.

“The oil industry hit hard in the 1970s. Crofters all went into oil. You can’t blame them, it’s good money but crofting is a way of life our forefathers had.”

Henry would like to see governments doing more to defend indigenous island industries, but admits that many taxpayers in the rest of the UK would baulk at the idea of subsiding oil-rich Shetland.

Oliver Henry and the staff at Jamieson and Smith have not been sitting around waiting for Holyrood or Westminster to step in. In 2004, the Smith family retired, selling their business to Yorkshire-based Curtis Wool Group. The new management have been busy, diversifying into everything from duvets and cushions to beds and carpets.

One of the biggest challenges for the wool industry is that anyone can effectively call their wool Shetland. Unlike Harris Tweed, there is no Act of Parliament strictly outlining the conditions in which Shetland cloth can be produced.

“Most of the Shetland wool available throughout the world is imitation,” says Henry.

“The Western Isles were quite savvy, they protected themselves. But in Shetland we didn’t do enough to protect it. What we have to do now is tell our story and spread the word.”

The largest commercial seller of finished knitwear on Shetland is also called Jamieson’s (no relation). On a weekday afternoon their stop on Lerwick’s Commercial Street is busy with a mix of tourists and locals.

Very little Shetland knitwear is fully hand-knitted due to the vertiginous costs. The beautifully patterned jumpers on the rails are machine-woven at Jamieson’s noisy factory at Sandness in the west mainland, but the wool retains the soft feel, the “handle”, for which Shetland is renowned.

“The women who are knitting this stuff can do things that no-one else in the world can do but they don’t see that,” says Lizzie Simmons from Jamieson’s. The problem is encouraging young knitters to take up yarn for money, not just as a hobby.

“Our youngest hand knitter is in her 60s,” she says. “In the 1960s before oil came, people would have to knit to get a hot meal on the table. They knitted all the time. They had to.”

Shetland was once also a weaving centre, producing colourful tweeds to rival those of Harris.

“Weaving used to be big, there were factories across the islands,” explains Zimbabwe-born Andy Ross, the moving spirit behind Global Yell, a textiles education and training centre on the island of Yell, an hour or so north of north of Lerwick.

“People still associate Shetland with knitwear but you say ‘Shetland tweed’ and people say ‘what?’”

Ross is trying to change that. The walls of Global Yell’s offices, housed in an unlikely business park on a windswept hillside near the ferry to Unst, the most northerly inhabited island in the UK, are lined with lively weaves. Donated looms on which Ross is attempting to rebuild Shetland hand weaving take up almost all the floor space.

In just six years, Global Yell has developed an island-wide reputation for excellence. Weavers are regularly invited to take up residences, exchanging their services for access to equipment, facilities and a spell amid the peaty browns and verdant greens that pepper the Yell landscape.

In 2013, Chelsea College of Art and Design graduate Kirsty Jean Brabin swapped London for Shetland on a summer-long residency.

“I came here thinking it would bit of an internship,” says Brabin. Instead she found herself drawn to Shetland, and the its weaving history. “The whole story of Shetland tweed and its decline really started to interest me.”

Now the Liverpudlian is back at Global Yell full-time, working alongside Ross on developing new Shetland tweed cloth lines to sell commercially.

Ross and Brabin are hoping to revive the once vibrant weaving industry. A recognised designation for Shetland tweed would help enormously, but even that would not herald a return to the huge textile factories of old.

“Harris exports to 15 countries. It would be nice to export to two,” says Ross.

Wool is unlikely to replace oil as Shetland’s biggest export anytime soon. The days of grandmothers scaling peat-covered hillsides knitting as they went are over, thankfully, but four decades on from the black gold boom some of Shetland’s old yarns could be ready for a retelling.