On the invitation of the Bishops of Freising, in the mid-14th century Friulian ironworkers began ironworking activities in the area beside the Selška Sora river. They processed iron ore and forged final products in the ironworking plants – furnaces, forges and foundries – that were erected beside the river. The main product that was manufactured was nails. In the 16th century Železniki was the leading producer of iron in Carniola, employing around 2,000 people in its production.
The iron industry faced a lot of problems throughout the entire 19th century. Iron and coal began to run out, and competition for cheaper products from elsewhere was increasing. The ironworks in Železniki ceased to operate at the start of the 20th century and the town faced a major economic and social crisis.