DEXTER (AP) – When Dexter Shoe Co. announced in 2001 that it was halting local manufacturing operations and putting hundreds of people out of work, there was no shortage of predictions that the town was on the brink of doom.

But instead of going into decline, Dexter evolved from a town with one major manufacturer to a bedroom community for Bangor, Waterville and beyond, according to local business people. Families that moved away for new jobs were replaced by retirees and white-collar workers.

A fixture in Dexter for more than 40 years, the shoe company was a major source of tax revenue and its employees from around the region helped support local businesses, said Dave Pearson, the town’s tax assessor.

“The nation had its September 11 and Dexter had its September 11,” said Pearson, recalling that the company had planned to make its announcement the same week as the 2001 terrorist attacks but delayed it a few days.

More than 800 people, most of whom were 35 to 54 years old, lost their jobs when the company closed its plants in Dexter, Newport and Milo. About 450 were principal wage earners.

Dexter Shoe’s parent, Connecticut-based H.H. Brown, cited foreign competition as the reason for moving manufacturing operations abroad.

It converted its former Railroad Avenue factory into a warehouse and distribution center for footwear. About 100 people work at the center, said Jason Reed, H.H. Brown’s director of distribution.

A couple of small businesses that catered to the industry closed, but others grew in sales, Pearson said. The loss in the tax base in the town of 3,900 and the decline in school enrollment was less severe than anticipated.

The owners of Tillson True Value hardware expected to be forced to downsize, but instead enjoyed steady growth during the past five years.

“I think part of it is the saturation of seasonal homes in New England,” co-owner Rich Pfirman said. People from away are buying homes at reasonable prices, significantly upgrading them, then moving here, he said.

“We have become more of a bedroom community,” he noted.

Despite the loss of the town’s major manufacturer, people were still willing to invest in the community.

“I see opportunity, and I’m not afraid to take a chance,” said John Chappell, who opened a new tavern called the Watering Hole about three years ago. “I see good things because the space and a readily available work force is there.”

The Rhode Island man, who owns a similar tavern in his home state, said an acquaintance sold him a lot on Lake Wassookeag in Dexter.

“I didnt even know where Dexter was at the time,” he recalled. When Chappell arrived to look at the lot in the middle of a snowstorm in January 1999, he said, he liked what he saw and returned to build a home on the property.

During a return visit, Chappell spied a “For Sale” sign on the shoe companys 120,000-square-foot former warehouse and retail store. He bought the property, renovated much of the first floor, bought the nearby Rubins Pub and relocated it to his new site, bringing all six employees along.

“The best thing that happened was the shoe company left; eventually there will be smaller businesses filling the gap,” Chappell said.

Chappell’s enthusiasm is echoed by the Dexter Regional Development Corp. and Town Manager Judy Doore.

“Every opportunity that presents itself for information about our community and the quality of life we enjoy and the labor market we believe we have, we take full advantage of,” Doore said.

Judy Craig, president of the development corporation, said the 15-member volunteer organization is trying to make the downtown more appealing and is working to help entrepreneurs.

“We focused our attention on making Dexter a place people want to be after Dexter Shoe closed,” Craig said.

No large manufacturers have moved to town, Doore said, but there is plenty of evidence of growth.

“We are seeing lots of growth along the water, not only new structures but a conversion of buildings from seasonal to year-round,” she said. There have been several subdivision requests.

Dexter’s land-use ordinance targets areas for development but hasn’t outwardly tried to lure big-box stores.

“We’re a town that looks like a town,” said Pearson, who believes Dexter will grow, in a good way.