He is married with kids and there are reports of arrests including his wife.
The dead victim was a 50-year-old man. He was later named as the terorist's boss Herve Cornara who was the manager of the delivery company where Yassin Salhi worked.
French President Francois Hollande was at an EU summit Friday with the main issues on the agenda the Greek debt crisis and the ever increasing numbers of migrants risking life and limb to get to Europe.
Hollande left the summit early and headed back to France this afternoon. He was expected to address the French people in a broadcast.
France has suffered a series of recent terror attacks, some anti-Semitic, this year notably it was the Charlie Hebdo offices in January where 17 people were killed.
Events unfolded around 10:00 local time (08:00 GMT) when two men reportedly drove into the factory carrying what has been described as an Islamic State flag.
Until President Hollande is back in France interior Minister Bernard Cazeneuve is fulfilling his role in relation to this terror attack and he was on his way to the scene lunchtime Friday.
The gruesome details of the attack are gradually being revealed with Sky News claiming 'Arabic Writing On Severed Head'. "The severed head had Arabic writing scrawled across it and was found on a fence next to two jihadi banners, a French official said." The head was impaled on a fence with jihadi flags close by.
Saturday it was reported the killer allegedly had taken and sent a gruesome selfie; he "spiked the head on the gates of a gas factory in Grenoble and posed for the sick [selfie] photo before he was arrested."
A couple of hours later terrorists attacked a tourist beach in Sousse, Tunisia - Beach terror Tunisa as gunmen attack
Later Friday there are reports of a third terror attack this time in Kuwait.