Welcome to Episode 5. You are getting access to the Industry button on the ribbon toolbar.  The Production panel in the Industry Orders screen is used to make materials.

The resources your Empire gains each turn are used to produce materials.  For example, Timber is processed into Lumber, and Iron Ore is converted to Cast Iron.

Lumber and Cast Iron have many uses, for example the Builder uses them for all developments, and the Engineer uses them to build roads.  Wool is turned into Fabric, which is needed to recruit labor and later, to build sailing ships.

Additionally, materials may be sold to other nations for a profit.