Advocates of Israeli settlement policies say the industrial zones are an example of the benefits Palestinians have under Israeli control, including much-needed employment to Palestinians.
Israeli security forces raided the village of a Palestinian suspected of shooting two Israelis dead, the army said Monday, making arrests while the assailant himself remained at large.
Gaza's Hamas rulers and other militant groups praised Sunday's attack, but none claimed responsibility for it. The second was named as Ziv Hajbi, 35, a father of three.
A third Israeli sustained serious injuries in the attack.
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Surveillance camera footage broadcast on Israeli television showed a man armed with a rifle fleeing down stairs and running away from the factory.
Israeli media reported that those killed were found shot to death on their office floor with their hands bound.
At his weekly Cabinet meeting, Netanyahu said they had been killed "with great cruelty".
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Officials reportedly believe that Na'alowa, who is said to have left a suicide note before the attack, is preparing to engage troops who close in on him in a firefight that could turn deadly.
IDF spokesman Brig Gen Ronen Manelis said the Shin Bet internal security service had concluded that the attack was an act of terrorism, but added that the gunman might have had "additional motives" that were not nationalistic.
The military launched an investigation of the attack to determine, among other things, how the gun was smuggled into the industrial park and whether the terrorist meant to take Levengrond Yehezkel hostage, having used zip-ties to bind her hands.
"One of the workers was sacked and he didn't like the owner. Everybody knew him. He went upstairs to the second floor because he knew who he wanted to shoot, and he shot", he said. "I was very surprised by what happened; there was no sign he was planning such a thing", he was quoted by the paper as saying.
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Barkan industrial park is next to the settlement of Barkan and was established in the early 1980s.