In the 19th century James Traill built a harbour and pavement works at Castlehill (ND198686), the institution achieving industry status in 1825. Flagstone was quarried from the ground, split from horizontal beds by leavers and wedges, dressed into squares and rectangles. The stone was exported via the harbour which was built from the local flagstone. The windmill, now represented by a stump, may have been used to drain the quarry.

The workforce of Castletown grew rapidly - by the turn of the 20th century 500 men were employed. Throughout the years Caithness flagstone has been used in most British large towns and exported to places as diverse as Ireland, Germany, India, Australia, New Zealand and South America.