In 1837, York Manufacturing began a separate company, the Saco Water Power Company, to produce textile machinery and control waterpower rights for the York Mills.
Saco Water Power built the Laconia Mills on the Biddeford side of the river in 1844, then started Pepperell Manufacturing Company in 1850.
The Laconia and Pepperell Mills produced heavy, denim-like fabrics.
The Saco Water Power Machine Shop, a separate factory for the production of textile equipment, also was built in Biddeford in the 1840s.