Establish railway or factory (7)
I believe the answer is:
foundry
'factory' is the definition.
(foundry is a kind of factory)
'establish railway' is the wordplay.
'establish' becomes 'found' ('found' can be a synonym of 'establish').
'railway' becomes 'ry' (abbreviation for railway).
'found'+'ry'='FOUNDRY'
'or' acts as a link.
(Other definitions for foundry that I've seen before include "Iron-casting works" , "Ironworks" , "Factory for casting metal" , "Factory where metal castings are produced" , "Metalworks" .)