The reason why Middle-earth did not have an industrial revolution is supernatural. When the Ainur sang the songs of creation, there was discord. Melkor, the mightiest of them, wanted to create something of his own, which was the root of all evil. The world they created was flawed. Within the world, the minds of those who seek to create were easily corrupted.
Middle-earth is a world where the creations of engineers often make the world worse and the engineers themselves tend to become bad guys. Think of dwarves or the Noldor in general. Or think about Fëanor who created the Silmarils or Celebrimbor who created the Rings of Power. Sauron and Saruman were both servants of Aulë the Smith, and look what they became.
There was industry in Mordor and in Isengard. Dwarves also had it, and the Noldor probably as well. Even hobbits managed to create some by the end of the LotR. But that industry never led to sustained prosperity. In the end, there was always war and destruction, because the world was flawed from the beginning.