By 1860, 16% of Americans lived in cities with 2500 or more people; a third of the nation's income came from manufacturing. Urbanized industry was limited primarily to the Northeast; cotton cloth production was the leading industry, with the manufacture of shoes, woolen clothing, and machinery also expanding. Energy was provided in most cases by water power from the rivers, but steam engines were being introduced to factories as well. By 1860, the railroads had made a transition from use of local wood supplies to coal for their locomotives. Pennsylvania became the center of the coal industry. Many, if not most, of the factory workers and miners were recent immigrants from Europe, or their children. Throughout the North, and in southern cities, entrepreneurs were setting up factories, mines, mills, banks, stores, and other business operations. In the great majority of cases, these were relatively small, locally owned, and locally operated enterprises.