Many of the hundreds of young women busily tying and snipping don't know a minnow from a mackerel. But their nimble fingers and sharp eyes have turned this picturesque hill town into the fishing fly capital of the world.

And many of the women have plucked themselves out of poverty in the process.

Millions of fly-fishing lures are put together here by a highly skilled female work force. The lures are shipped to the United States and elsewhere, where fishermen snap up these hooks dressed in colorful patterns and materials, hoping their choice will land the big one.

"Chiang Mai is to fly tying what Silicon Valley is to computers," said Wayne Richey, who heads Targus Fly & Feather, one of the four largest fly-making operations in Thailand. All mainly supply the nearly $1 billion-a-year U.S. fly-fishing market.

Fly fishing is barely known in Thailand, but lure companies were attracted to this pleasant, easygoing town by its centuries-old tradition of handicrafts that require some of the same dexterity and discipline as tying flies. The industry also receives government backing and labor costs are low.

Sweatshop operations abound in Thailand, but fly tying doesn't fit into this category. Competition among managers for prized workers is too intense, allowing employees to command relatively good wages and working conditions.

Jon Ingl Agustsson, who manages the Targus factory in Chiang Mai, calls it a "win-win situation." The company produces top quality flies at healthy profits while employees, many daughters of impoverished farmers, take home as much as 31/2 times the minimum wage. Considered more adept at such miniaturist work and more responsible employees, women make up virtually the entire pool.

Chiang Mai's economy also has benefited. The Customs Department says the value of fly exports rose to 227 million baht, or about $5.4 million, last year, about double the amount of five years earlier.

"Here is probably the best humpy tie-er in the world," Agustsson said, pointing out Sunan Saengphet as she wove elk's hair, rooster feathers and calf's hair around a hook to fashion one of the hundreds of fly types.

Sunan and others work on a piecemeal wage rate, producing between 100 and 200 flies a day, with the top tiers earning about $285 a month.

All are trained for one to two months when they start, but Agustsson, a native of Iceland, says it takes up to two years to become truly proficient. Some of the 700 patterns made at the factory are beyond the capabilities of even the best. Only two of the 158 employees, for example, have mastered a tiny fly resembling a horseshoe crab.

Targus, based in Mesa, Ariz., provides rent-free housing for women from remote areas, gives free English lessons to all workers and helps out those mired in extreme poverty, Agustsson said. When Sunan was struck with cancer of the mouth, the company paid for her treatment and plastic surgery.

Some of the companies gravitated to Chiang Mai after running into shoddy work and red tape in Latin America and other parts of Asia. Several set up their own factories rather than rely on contractors.

After several disastrous starts in Guatemala, Brookside Flies came to Chiang Mai a decade ago.

"The product is outstanding. Other places around the world just can't match it," said the president of Brookside, Jerry R. Schreiber.

The Denver-based company has tried to create a family atmosphere. Its 39 employees work at a pleasant villa or in their own homes and without set hours.

Natsiri Rattanajumrean, who runs the Thai operation, said Brookside's workers are eligible for retirement benefits after three years of regular employment, still a rarity in companies of this size.

Natsiri said Brookside hires disabled people and women cast off by their husbands, a not uncommon occurrence in rural Thailand. Three disabled men, two of them paraplegics, now work in a nearby dormitory where they live rent-free.

Richey is upbeat about the city's future as the global fly center. "Chiang Mai is a stronghold and will maintain its dominance," he said.

But some people in the business say rising labor costs in Thailand will eventually prod fly firms to relocate, with China and Kenya in East Africa looming as potential competitors for the business.

Kwanruen Thanomrungruang focuses on a fish fly at a factory in Chiang Mai, Thailand. U.S. lure companies have located in the town, attracted by its tradition of handicrafts.