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I have the following passage to be carried out:

I remember the first flight of Concorde, the aeroplane which was built with the co-operation of the British and French Governments. I was staying at my grandparents' house in Bristol. My grandad (retire) by that time, but he (work) at the factory that built Concorde.

I put down the whole passage for you to understand the whole picture. Look at the last sentence. I would like to know if I'm correct. I've made up my mind to write the following:

My grandad had retired by that time, but he worked at the factory that built Concorde.

To cut a long story short, "working at the factory" is past finished action, which is not valid now. I understand that in spoken English natives would rather say "retired", but I think in this case it would be better to fill the blank with "had retired" as it was an action happened in the past, having some signification at the time the story was taking place.

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    Full stop after "first flight of Concord". That is a complete sentence. – James K Nov 6 '17 at 21:13
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He had (already) retired by that time.

The time-phrase by that time (which refers to the time of your stay in Bristol, the time of Concorde's first flight) invites the past perfect.

Just as the present simple can refer to current practice or habit, simple past can refer to past practice or habit:

He had retired by that time, but before retiring he worked at the factory that built Concorde.

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