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It's still in. Surhay got it twice recently. One with his alt on the duel when we were practicing chambering. The other with his main on DTV.
This might change a bit, but:there will be about a dozen raw materials.Every village has 3 materials it can produce.the owner can shift the production balance.the amount of resources produced is defined by the workers in the village.the workers are other players who get a gold wage, defined and given out by the village owner.the real item production will then happen in towns.a town can produce up to 5 goods at the same time.the village owner can set a smith.the smith's skill defines of what quality (=heirloom) the produced item is.the amount of workers in the town (=players) define how many items will be produced.there will be other (individual) ways of creating weapons, but that will be very slow and not feasable to equip an army with it.