The Delphi Industries site in Sudbury is to be sold for housing, dashing hopes it could be saved for industrial use and preserve up to 500 jobs.
News that the nine-hectare site, off Newton Road, is to be sold to Charterhouse Property Group was met with shock and disappointment in the town.
South Suffolk MP James Cartlidge angrily described it as a "bitter blow", adding that companies had expressed interest in buying the site and keeping it in industrial use.
The news emerged following a letter from the American corporation to Mr Cartlidge, which he spoke about in the summer adjournment debate in Parliament on Friday.
It comes only days after a report commissioned by Babergh District Council recommended the site be kept for commercial use.
The Delphi diesel plant will close next year with the loss of about 500 jobs. The site has capacity to employ more than 2,500 people.
Speaking in Parliament, Mr Cartlidge said: "My position is, first, that our planning authority should stand firm.
"If a planning application comes in it should reject it as being out of policy and say that this site should remain for jobs and employment, because it is absolutely key to our local economy.
"I say both to Delphi and to the property development company that were their application to be rejected — which, as we know, happens in the system these days — and they appealed with all their legal power and the rest of it, I would have no hesitation in asking for it to be called in by the Secretary of State, because, I can confirm to the House, we have had interest from companies that want to buy the site for industrial use for new technology."
Quoting the letter from Delphi, he said: "'We understand that Charterhouse's intention is to clear the site following our vacation in order to facilitate the necessary remedial works'.
"In short, the site will be bulldozed and every job lost."
The 121-page report, commissioned on behalf of the South Suffolk Taskforce, was compiled by consultants Carter Jonas and concluded "the best use of the site is as a commercial-led opportunity in some shape or form, unless significant concessions to the affordable element of the residential scheme can be made through the planning process".
The taskforce, which was established after the announcement of the Delphi closure, is chaired by Mr Cartlidge and includes representatives from town, district and county councils and the New Anglia Local Enterprise Partnership (LEP).
Mr Cartlidge said Delphi had previously expressed its intentions, including to the taskforce, that its priority was to keep the site for industrial use.
Sudbury Mayor Robert Spivey said: "500 people are losing their jobs and without an industrial company to take it on it's really a big blow. My first reaction is surprise."
He added: "I think we need a bit more explanation than this. It's very good for Delphi, but what about the rest of us?"
Robin Bailey, chairman of the Sudbury and District Chamber of Commerce and Industry, said he was "shocked and quite disappointed" about the turn of events.
"We will very much continue to fight for it to remain an industrial site. We are desperate to attract new companies and for the ones we have got to expand."
John Ward, leader of Babergh District Council, said: "The options appraisal recently commissioned by Babergh on behalf of the South Suffolk Taskforce determined the two most financially viable options for the site was the replacement of existing building with a new mixed commercial scheme, followed by a mixed commercial and residential scheme.
"The former was preferable to Babergh as it conformed with the listing in our emerging joint local plan of the Delphi factory site as a protected strategic employment site, but as the local planning authority we will consider any application that meets legal requirements and welcome progress with the site."
Delphi was approached for comment but no-one was available.
Published by East Anglian Daily Times.