In spite of the best efforts of the Council to attract private industry, little was achieved in this respect, and it was realised that only the establishment of the promised Government railway workshops would attract the population. A public meeting of ratepayers held in May 1898 resolved to send a deputation to urge the Government to fulfil its promises regarding the workshops. This had no immediate effect, but the local Member of Parliament revealed that the Government now proposed to build a much larger workshop complex at Midland Junction that it had originally intended.

Clearing of the site for the workshops began in 1901, on the Government railway reserve adjacent to the Midland Junction station. The construction of the workshops was commenced early in 1902 and by 1904 the complex was completed. Transfer of the various sections of the workshops staff from Fremantle to Midland Junction was completed in January 1905, when the machinery staff was transferred. The new workshops [Þ] were the most advanced and complete in Australia. There were to be the mainstay of Midland Junction's growth and prosperity for many years to come, and made the town, along Perth and Fremantle, one of the three main growth nodes from which suburban development in the metropolitan area has proceeded.

The announcement in 1900 that the railway workshops would definitely be built caused a sudden commercial activity in Midland Junction. [Þ] Among the signs of this was the establishment by the firm of G. Y. C. Hoskins of a foundry to manufacture steel pipes for the goldfields water scheme.

Following the new industrial expansion, building of commercial premises in Midland Junction increased substantially. [Þ] It was stated in 1910 that the town's business and shopping centre was developed to cater an expected population of twenty thousand, but by 1909 the population had only reached 4,500. One of the causes of this was that, although the number of men employed at the Railway Workshops [Þ] was in excess of 1,200, the majority of workers chose to live outside the boundaries of Midland Junction, in Guildford and in the newly developing suburbs of West Guildford and Bayswater, where the price of building lots was cheaper.

The same optimism which had caused the growth of Midland Junction's commercial centre had also resulted in speculation in land, and prices of buildings lots originally valued at 15 pounds rose to 265 pounds, pricing them out of the range that the average worker was willing or able to pay. It was easy for workers who lived outside Midland Junction to travel by train to work, especially since the train [Þ] stopped immediately outside the entrance of the Railway Workshops. The result was that Midland was provided with a commercial centre [Þ] far in excess of the needs of its resident population. As one writer picturesquely put it, 'The shops stood empty and desolate in the treeless town, gradually succumbing to dilapidation'.