FRANKLIN—International Paper’s Franklin mill began operations this week to produce fluff pulp, more than two years after the mill’s closure resulted in the loss of 1,100 jobs.

The mill now employs more than 200 workers.

The company converted one of six paper machines to produce the absorbent material used for products like diapers. The mill is expected to produce 840 tons of the material a day when it hits full production, said mill spokeswoman Julie Brennan.

“We still have things to fine tune,” Brennan said. “We’re still working through some start-up issues.”

Running the converted machine that hadn’t been operated in more than two years was a big project, Brennan said, in addition to preparing the rest of the mill for start up.

“These things never come without roadblocks,” she said. “We’ve chipped away at all of them.”

The opening of the mill in Isle of Wight County represents an almost $90 million Investment, but also means additional revenue for local government coffers in the form of machinery and tools taxes.

The city received about $1.1 million in funds in fiscal year 2011-2012 from a revenue sharing agreement with Isle of Wight County.

City Manager Randy Martin said he isn’t expecting any funds from that agreement this year, noting that the 2013-2014 budget cycle is the earliest the city could benefit from the mill’s repurposing because the county has to collect the money and then pay the city.

Martin said while he’s been in communication with county officials, he hasn’t been given an estimate for how much in tax revenue the new mill operation will bring in.

“The job creation, salaries and the tax revenue it creates should have a positive impact,” he said. “I don’t know how much it will be.”

Attempts to reach Isle of Wight Economic Development Director Lisa Perry and county spokesman Don Robertson on Friday were unsuccessful.

Downtown businesses have already reaped the benefits of IP’s decision to repurpose the mill, cashing in on the activity there prior to start up.

“So far, the lead in to start up has been good with new workers and contractors using our hotels and restaurants,” said Dan Howe, executive director of the Downtown Franklin Association. “We don’t want to get ahead of ourselves and we still have a long way to go, but it’s a positive step.”

Texas Nails and Spa; Simply Distributing, a vacuum sales and service shop; and Downtown Clearance Center, a furniture store, have all held grand opening ceremonies in June. Howe gives at least partial credit for that to increased activity at the mill.

“I think we’re going in the right direction,” Howe said.

Amanda Jarratt, president and CEO of Franklin Southampton Economic Development Inc., said the mill announcement coupled with the announcement that Enviva, a wood pellet manufacturer coming to Southampton County, will have a groundbreaking this month is important news that will strengthen the area’s ability to attract industry.

“We added the workforce and environment to make these things successful,” she said. “It’s important to showcase we have the environment here to allow business to be successful.”

Teresa Beale, executive director of the Franklin Southampton Area Chamber of Commerce, said it’s nice to see people back at work and the facility back on line.

“The first word I think of is exciting,” she said. “It’s an exciting day for the community.”