With Kentucky Union Railway Company's track laid in Powell County in 1886, the area's timber industry expanded. Red River Lumber Mills, founded in 1880, became the largest steam-powered sawmill in Kentucky. In 1890, steady operation began at one of America's largest timber processing plants. A 1906 mill fire and deforestation of the area's timber led to the end of Clay City's boom days. Though there is evidence of earlier iron production in the area, land was bought for this purpose in 1805 by Robert Clark Jr. and Wm. Smith. Known as Clark and Smith's Iron Works from 1805 to 1808, the site was followed by a blast furnace called Red River Iron Works, which operated here from 1808 to 1830. It was later rebuilt on another site as Estill Steam Furnace and closed in 1869.