While Pingu is playing with his toys, his mother returns from the shops with a gift wrapped purchase. Pingu is very excited to see what is under the wrapping, so Mum takes the paper off to reveal a brand new knitting machine. Mum puts three rolls of wool onto the machine and Pingu is most amazed at how quick it knits things; within a few seconds, a new woolly tea cozy has been made.
Mum has decided to set up her own knitting business and putts up her sign outside the igloo. Grandpa and Robby soon come along and Pingu starts to encourage them to buy some of Mum's new knitted items. Grandpa buys himself a pair of red gloves and a yellow scarf for Robby.
Pingu is so fascinated at now fast the knitting machine is that he really wants to have a go on it too, so when Mum sets out to sell a bunch of her items down at the shops, he takes the opportunity use it. He loads the machine up with a mixture of different coloured wool and makes an extra long multi-colour scarf while Pinga keeps loading more and more wool. Then suddenly the machine goes out of control and Pingu and Pinga are soon wrapped together in their extra long scarf.
When Mum comes home, she is most surprised to see her two young penguins' heads stick out of a rolled up scarf and not very pleased to find that they have been messing about with her new knitting machine while she has been away. Then Dad comes home and he and Mum unravel Pingu and Pinga out of their extra long scarf. Now they need to work out what they are going to do with the scarf now that it has been made. Luckily Pingu has an idea and they use the machine to unravel all the stitches in the scarf and make new seperate items. Mum is so pleased that he uses the wool from the scarf to make woolly hats for all four of them. Pingu and Pinga love their new hats, even more so than they love the new knitting machine.