UPDATE 1-At Obama's inauguration, a Stars and Stripes made in Belgium?

(Adds company says military units carried flag at inauguration)

BRUSSELS, Feb 6 (Reuters) - When President Barack Obama was

sworn in for his second term on Jan. 21, it's a decent bet that

at least one of the flags fluttering behind him was made in

Belgium.

The Waelkens flag company, based in the small town of

Oostrozebeke in Flanders, supplies around 2,000 flags a year to

the United States, with clients including the Pentagon and other

U.S. government departments as well as the United Nations.

But it's not just the far side of the Atlantic where the

company is gaining ground - it also makes flags for NATO,

national militaries, the European Union and just about every

country in the world, from China to Nigeria.

"We have a lot of know-how about how we have to make flags

and a big tradition of embroidery," said Benedikt Waelkens, who

runs the company with his brother, David. "There aren't a lot of

people in the world who can and are making handmade flags."

Benedikt said clients keep coming back because of the

company's unique flag-making knowledge and its faithfulness to

tradition. National and institutional flags have extremely

precise guidelines about how they must be made - down to the

number of stitches per centimetre and specific fabric shades.

What began in 1928 as a family business making embroidered

garments for priests is now, four generations later, an

international enterprise with a growing reputation.

The company said it had made a flag carried by military

units at Obama's inauguration and also made Stars and Stripes

banners for the White House. It could not say whether it had

provided one that flew on the Capitol at the inauguration.

Nearly half of Waelkens' flags are embroidered - some even

by hand - setting the company apart from competitors who produce

printed flags. David believes embroidery carries more symbolism

and likens it to art, since a handmade flag can take four or

five days to complete.

Benedikt said a large, handmade U.S. flag costs about 400

euros ($540). Waelkens has four-year contracts with the EU, NATO

and the United Nations - each of which have scores of buildings

and hundreds of ceremonial rooms that fly flags.

Benedikt explains the business in terms of hierarchy: the

highest-profile EU or UN officials have the nicest flags in

their offices - made of silk, embroidered and with fringe. But

below the top, there are hundreds if not thousands of other

civil servants who also have banners, albeit of lesser quality.

During the financial crisis in 2007, Waelkens moved its

screen printing business to Romania, but the brothers say they

want to keep most of the company in Belgium for tradition's

sake.

Benedikt wouldn't give details on the privately held

company's income but said 2012 was its best year. He attributes

the success in part to consolidation in the industry as well as

to the company's vertically integrated model - it makes, sells

and markets its flags and even produces the flagpoles.

But perhaps the key to the business is its personal, family

touch - some of the brothers' current employees also worked for

their father and with their grandfather.

"Human capital of the company is the most important thing,"

said Benedikt. "Happiness of your people, you cannot buy that."

(Reporting By Teddy Nykiel; editing by Luke Baker and Matthew

Tostevin)

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