Local-industry road switching is one of my favorite types of operations and can be puzzling/confusing at times. As strange as it sounds, you might want to see how Model Railroaders create operations, since; well Railworks is basically the same thing only virtually. There are many books (some free in pdf form) that covers setting up operations for switching.
Here is some things to the best of my knowledge and from observing the prototype...
There are two types of locals. The "local" which will work areas within, or close to, the town the yard is located and work branchlines and spur's, and a "turn." These sometimes look like normal mainline trains since they leave a yard, go a certain distance and turn around and make their way back to the yard it left. And can be over 80 cars long.
As an example let's say there is a "turn."
A- A mainline freight will enter the yard and drop a certain number of cars off. This can and usually is repeated by other trains. Until the number and type of cars is enough so the turn can go out and work.
B- The crew will put the train together. The crew will assemble the train in such a way to make the job easier (IE if a siding requires many cars they will group them together). And head out of the yard.
C- Since the turn will be making their way back to the yard, they work industries with
"trailing" switches on the way out.
D- Once the turn makes it's way to the point where it turns around, the locomotives will run around the train and couple up to the end. If possible the whole train will be turned (IE goes around a
wye).
E- The turn will then makes it's way back to the yard, working the industries it didn't work on the way out (remember facing and trailing switches). Once back in the yard it will set it's train on a yard track or processed to switch out the cars onto other tracks to be added to outbound trains or to be picked up by trains.
F- Remember since the turn will be working the main, it's the lowest priority and will and have to get out of the way of other mainline trains (not a problem on a double track line).
Now let's look at a "local."
Basically it's the same procedure as shown above. Except locals don't venture to far down the mainline. And work the branchlines and industrial spur's. While a turn works industries on the mainline. These are even lower in priority then turn's and will get out of the way of basically everything on the mainline. Exception being MoW (Maintenance of Way) things like a Hi-rail truck.
If a local or turn cannot be turned or the locomotives ran around the train, then it will have a locomotive on each end (heck if things are really tight, then a locomotive can be spliced into the train itself). If long back-up moves are required and a locomotive isn't on both ends a caboose is used as a shoving platform (on the return trip it doesn't matter where the caboose ends up in the train).
I'll put up some videos in a little while, many are shot from a distance, since most would require to trespass on RR and private property to get a close up view of the action.
EDIT: (Rare Baldwin diesel doing the honors)
http://www.youtube.com/watch?v=szqLdcMOIPshttp://www.youtube.com/watch?v=JSEcdKX-jus