I see. Any particular reason why these weird people gather where they do?

There are weird people of all types all over the place. Certain regions just have certain stereotypes for weird people and for Appalachia, the weird people are Hillbillies. If you were to talk about Florida, you'd probably joke about retirees, of liberal yuppies for the Pacific Northwest. It's just a thing.

I'm failing to see how those are niche industries. I'm pretty sure that the US, much like the rest of the world, still uses those to produce, well, books and cars. Do you guys have coal-to-energy still?

So I'm not super huge into economics or how these things work, but I'll try my best to answer this question, though hopefully someone who knows a bit more than me can expand upon things or correct any mistakes I make.

The problem with coal, lumber, and steel, like other resources such as oil, is that they're largely based upon demand. If something happened tomorrow and all of the sudden people stop buying those goods, a lot of people will get laid off, which creates a huge rippled effect of bills not getting paid and goods not being purchased, which leads to tightening of the belts, which leads to less bills getting paid and less goods being purchased.

Coal - Coal use is dying a slow, yet steady death here in The States for a lot of reasons. The push for greener energy and the cheap abundance of natural gas have made coal suddenly look very unattractive, both from an ethical and a financial standpoint. Coal companies are being hit very hard right now from all sides and the companies that depend on the coal industry, from mining equipment manufacturers to chemical processing companies, are obviously feeling that pinch as well.

Lumber - I really don't know how much lumber comes out of Appalachia any more, though if I had to guess, it's probably on par with what you see coming out of the Pacific Northwest and Canada so it's probably doing pretty well right now.

Steel - From what I understand, Asia becoming home to many modern world powers, such as China, Japan, South Korea, and India, has caused their demand for steel to go through the roof. The thing is, they're going to source their steel locally, mostly from China, because it's cheaper than having stuff shipped to them, which makes a lot of sense. This creates an abundance of steel though, causing global prices to drop, making it more difficult for smaller steel firms to compete. As a result, a lot of them have closed their doors, causing people to lose jobs.