Industry Specialization in Cities: Skylines

In order to build 'specialized' industry, you need to fulfil the requirements necessary for that type of specialized industry. Make sure the following things are present in your city:

1. You have zoned an area of industry within a district with the specialization you want.
2. The zoned area (partially) covers the correct natural resource.
3. You have enough workers available of the correct education level. Oil and Ore industries want a mix of education levels, while Farming and Forestry prefer 'low' education levels.
4. Provide the industry buildings with the services they need. Typically this includes Power, Water, Crime protection and Fire protection services.

I figured out the issue. In order to specialize you need to first create your district. AFTER you create the district go into the second tab on industry specialization, and click the industry you want. Then with that selected, click on the district you want to set specialization for.