While it's not strictly wrong, there are subtle reasons why it's unnatural or likely to be misinterpreted.
The important component is the contrast. "Used to" is a very effective and common way of signalling that the first sentence is not a self-contained thought, but is the first half of the contrast completed by "now". But — as so often ends up happening in language! — not using a marker like "used to" doesn't leave it ambiguous as to whether there's a contrast; its absence suggests a conscious choice to express a self-contained thought.
Why is this important? Because "David worked in a factory" as a self-contained thought expresses to me that it was the main occupation of his working life, and he is now either (chronically) unemployed, retired, or dead.
The present perfect is not among the options your study guide gives. It too would work, because it closes off the "entire working life" reading by implicitly contrasting the past with the present. This is one of the main functions of the present perfect.
You could also create the contrast by adding words like "David worked in factory before / until 20XX / in his early years" or another qualification that bounds the timeframe when he worked in the factory. If I were to say "worked" on its own, I would emphasize the word, over-articulating the "ed" to highlight the past tense. (In this scenario it'd seem like I was correcting someone who believed that he still worked in a factory.)
But the clearest, easiest, most common contrast is still "used to".
