OAKLAND — Life is returning to the big, blue mill on Messalonskee Stream.

Where generations of workers once spun wool for the country’s garment industry, Ed Koz now designs display crates for companies such as Agway and Pepperidge Farms. Jeffrey Lieberman and Frank Nardone package and ship custom shelves for retailers such as Seventh Avenue and, closer to home, Maine Mountain Mornings.

The activity is enough to make Michael Dye, president of the fledgling K-D Display & Design, smile.

He realizes his small company may never employ the hundreds of people the Cascade Woolen Mill once did, but he remains optimistic he can add eight to 10 jobs annually and eventually find enough tenants to fill the mill again.

“I want a lot of people here. I want a lot of product going out of here,” said Dye, 32, who started K-D Display & Design with his brother Jason slightly more than a year ago.

The spinning and blending machines in Cascade Woolen Mill shut down for good in the summer of 1997, putting about 100 people in central Maine out of work.

After more than a century, the company no longer could compete in a world where cheaper fabrics such as cotton dominated the clothing market.

K-D Display & Design, launched in late 1997, initially set up in an old hardware store near downtown Oakland but sought more space.

Dye had known about the dormant mill, which lies near the heart of town and just a couple of miles from Interstate 95, but had always considered it out of the company’s reach.

“I saw it in August and thought, `No way. They’d be asking too much,”‘ he said. “But I kept in touch.”

Last fall, the town of Oakland, which was owed nearly $400,000 in back taxes from former owner Gerry Tipper, sought to recover some of the money by selling the mill at auction.

Officials rejected the highest bid of $60,000, believing the property could fetch more. Hearing the news, Dye began talking with the town.

After weeks of negotiations, the two sides reached a purchase price of $200,000 late last year. K-D moved in about three weeks ago.

Eight workers now use the cavernous first floor that once housed Cascade’s shipping department. The smell of freshly cut pine fills the air.

K-D buys the lumber for its products, designs models for customers, then relies on about 60 contractors to produce the custom tables, shelves and display racks that form the company’s niche.

Workers paint and finish them at the Cascade mill, then ship them to customers across the country.

Dye realizes the four-story mill is far too large for his company. The top two floors, which once housed the big spinning and blending machines, lie quiet, as do several outbuildings.

But Dye intends to invest about $100,000 in the building and lease space to some of his contractors. That way, the entire operation could be run right from the mill.

K-D had sales of $1 million last year, and Dye expects business to grow by as much as 25 percent each year.

The company, he said, is here to stay.

“There is surprisingly little space available in this area,” said Dye, who lives in Gardiner. “I think we could [create] a nice manufacturing park here.”

That is good news to many people in town, including Town Councilor Hobart Pierce, who retired from Cascade nearly five years ago.

The town took the mill for back taxes but never wanted to own it. K-D was just the type of company the town had envisioned owning the place: It is nonpolluting, committed to Maine, and looking for room to grow.

“I’m very happy it’s happened,” said Pierce, who worked at the mill for 42 years. “We wanted to get someone in there.”