The First World War cut off overseas markets, which established local industries and eroded Stockport's eminence. Even so, in 1932 more than 3000 people worked in the industry, making it the third biggest employer after textiles and engineering. The depression of the 1930s and changes in fashion greatly reduced the demand for hats, and the demand that existed was met by cheaper wool products made elsewhere, for example the Luton area.
In 1966, the largest of the regions remaining felt hat manufacturers, Battersby & Co, T & W Lees, J. Moores & Sons, and Joseph Wilson & Sons, merged with Christy & Co to form Associated British Hat Manufacturers, leaving Christy's and Wilson's (at Denton) as the last two factories in production. The Wilson's factory closed in 1980, followed by the Christy's factory in 1997, bringing to an end over 400 years of hatting in the area. The industry is commemorated by the UK's only dedicated hatting museum, Hat Works.
From the 17th century Stockport became a centre for the hatting industry and later the silk industry. Stockport expanded rapidly during the Industrial Revolution, helped particularly by the growth of the cotton manufacturing industries. However, economic growth took its toll, and 19th century philosopher Friedrich Engels wrote in 1844 that Stockport was "renowned as one of the duskiest, smokiest holes in the whole of the industrial area". The town was connected to the national canal network by the 5 miles (8.0 km) of the Stockport
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