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As each smaller City grows, they gain capacity to house more industry. It's hard to notice but the game will signal when a new industry slot opens. The player can build there, or after some time another party will build. Exactly what is built when is not understood in great detail but tends to start at the more basic demand items and work up to the more exclusive items, trying to eventually have a factory available for all in-demand goods. You can manipulate when each City gets a new industry slot (through growth) by serving its demands. You can then encourage what you want to be built where you want to a limited extent through timing and order. There is not a clear simple procedure though. To ensure the industry you want where you want it, you will need to build it yourself, and that does tend to be pretty expensive. You can buy existing factories and destroy them and build what you want, but that is extremely expensive.
Most recommendations on this scenario suggest building the mill near the destination (but not in the same City as that will complicate things.) I ran things from the existing mill in Toledo IIRC with no problem getting the job done, so that is an option if you start working on it early enough.
And a pretty much for a given, REPLACE STATIONS that are rebuilt on the map with stations with signals. You can start with only 2 tracks at first and upgrade later. It's the only way to optimize the trains to use ALL 4 TRACKS. without it, you are screwed (aka long lines of trains ignoring open tracks, and waiting for what is filled to clear. Even trying to manually set a train to use a certain track still an extreme waste of time.
By using only stations with signals (exception is freight/goods that only needs one track to move goods, cities always has the dual/quad station with signals) allowed me to have a train waiting to load while the other 3 tracks keep getting used. Talk about a HUGE difference between the moronic regular station that is impossible to get the trains to use any of 4 tracks if one is open unless you manually keep setting the trains over and over and over and over, and the signal station that requires ZERO settings of the trains to use all 4.
I have tried this chapter several times. It is a luck of the draw. Last play, the sawmill appeared in the very city close to the trees/logs, dramatically decreasing the time to get the lumber for the bridge going. Was able to finish a few years early.
Museums will help you grow cities and grow them faster, but is by no means required. When a city is small, it only has a single open slot for industry. Grow it to get access to the other slots. You will get notifications when cities grow. And you will have first crack at buying an industry for an empty slot. If you don't do anything with the empty slot, the game will eventually build something there and it might not be the industry you want. Watch for notifications that a city has grown, and then jump on the open industry slot to get the industry you want.
And watch out for Promoters and Market Criers.
Here's my end position for chapter 3 (as much as would fit on screen):
https://steamcommunity.com/sharedfiles/filedetails/?id=1998071484
https://steamcommunity.com/sharedfiles/filedetails/?id=1998071520