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You know that patch on the back of your jeans? Usually leather, sometimes paper or rubber? Well, there's a decent chance it was made in Canada.

Every Friday, the leather workers at Medike Branding Solutions in Markdale, Ontario, pack a truck with three or four pallets of patches emblazoned with brand names like Guess, Lucky and Calvin Klein. By Saturday, they're loaded aboard commercial jets on the way to the company's Hong Kong distribution centre. From there, they're sent to textile plants across Southeast Asia.

CEO Jonathan Harris bought the company four years ago. It started in 1984 as a supplier to Levi's, and Harris still keeps one salesman permanently at Levi's headquarters. "There's a fair trick to making leather for denim, to try and get a natural leather to last at 46 C for 10 or 15 washes," he says. It's only gotten harder as fashion companies increasingly sell themselves as ethical brands: "All these guys have lists of chemicals that are banned and performance benchmarks you have to hit." In addition, Harris's 125-person shop churns out lots of high-margin patches—ones with Swarovski crystals or metal pieces embedded in them. "Some of these patches need five machines to make," says Harris.

Now, he's looking to branch out. For the past eight months, he's been taking on smaller custom jobs, and he's looking to buy a company that makes high-end leather bags or accessories. The margins would be higher—and he might even be able to brand his own company's name on the hide.

Swipe or click for more photos. All photos by Lindsay Rosset for Report on Business magazine