History says industrialization encourages slavery
The Industrial Revolution lasted from to 1760-1840. Emancipation did not start to happen until we moved into Post-Industrial society. Just because slaves were often working in different geographic areas than freemen does not mean they were not a vital part of the industrial revolution. In fact, countries that did not have slaves at thier disposal were much slower to industrialize.
Why slavery lasted throughout the Industrial Revolution
Saving money on industrialization does you little good if the materials you are working with are too few or too expensive. Slave labor is a good way for an early industrial society to bring in those cheap natural resources. A textile mill needs large quantities of cheap cotton to make a profit. A saw mill needs loads of cheap wood. A steel works needs tons of cheap ore and coal. Factories CAN produce a lot of goods, but without a strong supply chain, they are worthless.
So throughout the industrial revolution, these supply chains were protected through the use of large scale forced labor. Slaves, chattel serfs, dept peons, and various other classifications of forced labor were engineered to create supply chains to meet the needs of the factories. Because of this great disparity between gathering efficiency and production efficiency, slavery of some sort is almost an inevitable part of industrialization.
So, while slaves may not be needed to run your demonic factories, they may require large numbers of slaves to supply the factories with raw materials if the techniques to gather the materials are still done by pure manual labor.
Why Slavery Collapses
A post-industrial society is defined as one where the profits of service based businesses outpace the profits of industrial businesses. Over time, industrialization and automation spreads to more and more parts of your society until meeting the demand for manufactured goods no longer requires your whole population. When this happens, capitalism ensures that you will always have a stable supply chain given a free population; so, the need for slaves wains.
More over, a post-industrial society requires a large population of freemen to recognize service needs and adjust what they do for a living to fill those needs. Slaves are a poor option for this economic model because they are not free to recognize and exploit new needs. So, it is only economies that continue to use slaves after the industrial demand of a nation is met that tend to fall behind.
In summary: as long as your nation is "in the middle of industrialization", they will still have a huge demand for slavery, and any concern about that is simply an anachronistic misunderstanding of history.