Factory located over railway (7)
I believe the answer is:
foundry
'factory' is the definition.
(I know that foundry is a type of factory)
'located over railway' is the wordplay.
'located' becomes 'found' (I've seen this in another clue).
'over' means one lot of letters go next to another (in a down clue, some letters go over others).
'railway' becomes 'ry' (abbreviation).
'found'+'ry'='FOUNDRY'
(Other definitions for foundry that I've seen before include "Metalworks" , "Metal workshop" , "Ironworks" , "Factory where metal castings are produced" , "Factory for casting metal" .)