In the work of the Greek poet Hesiod, the three cyclops,
Arges, Brontes, and Steropes (Bright, Thunderer, Lightener)—[...] forged
the thunderbolts of Zeus. Later authors made them the workmen of
Hephaestus and said that Apollo killed them for making the thunderbolt
that slew his son Asclepius.
This would be the connection which led to the naming of the Sheffield ‘Cyclops Works’, that @GarethRees cited in comments, but which equally applies to all foundry men.
Working molten metal is a dangerous trade, sparks fly and no doubt the classical link of one eyed creatures with foundry work reflects a tendency of those in that trade to lose eyes, particularly before glass eye protection became possible and common.
The song also contains the line
They'll rob you blind if you don't fight
Which makes me wonder if his father had his eyesight damaged by the work. But even if not, cyclops were iron shapers to the Gods, Pa MacColl was one of their trade, and foundries are smokey places.