Once in charge of personnel, textile VP lost job after move

by Jordan Green

As vice president of human resources for Guilford Mills, Richard Novak oversaw the hiring and firing at the Greensboro-based textile company through the tumultuous years of its restructuring from bankruptcy, a period when it closed plants in the United States and Mexico and eviscerated its apparel division.

Perhaps the cruelest cut of all took place when Novak himself was terminated in October 2005, only 10 days after the company relocated its corporate headquarters from Greensboro to Wilmington.

A civil suit filed in Guilford County Superior Court in late December seeks damages of at least $10,000 to cover financial losses Novak says he incurred while relocating to Wilmington with the understanding that he would be able to keep his job.

James M. Powell, a Greensboro lawyer representing Novak, said his client would have no comment on the case beyond the contents of the civil complaint.

Elizabeth Patrick, the company’s current vice president for human resources, characterized Novak’s departure as a “separation” in an interview on Dec. 28. “We currently have a separation and mitigation agreement,” she said. “Guilford Mills plans to work with him in the spirit of that agreement.”

She added that she was unable to comment on the circumstances of Novak’s firing or the merits of his case. “This is all news to me,” she said. “I’ve been away on vacation and I wasn’t even aware of any lawsuit before I got your call.”

Guilford Mills announced its decision to relocate its corporate headquarters to Wilmington in the summer of 2005. Shannon White – credited in a company press release with leading the turnaround of a financially troubled plastics company – had assumed leadership as CEO of Guilford Mills in May 2005, replacing John A. Emrich.

Novak’s lawsuit states that the human resources head continuously inquired about his employment status in the months leading up to the company move, and was reassured that his job was secure.

As a vice president, Novak claims he was entitled to “executive benefits” and qualified for coverage under the company’s relocation policy, entitling him to reimbursement for temporary living expenses, lodging and meals, lease cancellation fees, transportation and storage costs, not to mention compensation for loss in a home sale and for loan-origination fees in the purchase of a new house.

The lawsuit states that Novak sold his house in Greensboro on Oct. 3, and in the haste of the transaction was forced to accept less than its appraised value. A week later, Novak transferred to Wilmington and leased an apartment while a new house was being built. At first, the lawsuit states, Guilford Mills paid Novak’s rent.

Ten days later when Novak was let go the company stopped making payments, and the fired vice president “had a magistrate’s summons for unpaid rent posted on his apartment door,” according to the lawsuit.

In addition to failing to cover relocation costs after assuring him of his job security, Novak’s lawsuit accuses the company of violating a “two-weeks’ notice” policy covering terminations.

The former vice president joined the company in 1996 and earned a six-figure salary. Novak received a $100,000 bonus in 2002, bringing his total compensation to $316,475, according to the company’s 2003 annual report. The same year Guilford Mills completed restructuring after filing for bankruptcy. If Novak’s compensation seemed generous in a year of trimming sails, it was a fraction of what his boss received. Then-CEO John A. Emrich’s total compensation in 2002 was $1.3 million.

The company, which was founded in 1946, had become a leading supplier of fabrics for the automotive industry by the 1990s, with sales topping out at $856 million, according to an official company history. Yet the same decade would deal the company a crippling blow with the passage of the NAFTA free-trade pact. “Guilford, along with substantially all other domestic textile manufacturers,” the 2003 annual report would state, “was dramatically impacted by staggering increases in imported apparel fabrics during the late 1990s.”

Since Novak and Emrich’s departures and the company’s relocation to Wilmington, Guilford Mills has begun to expand again. In November the company announced the acquisition of French-based Salome-Rokona. The new subsidiary, Guilford France, operates a textile plant in the Paris suburb of Troisvilles. The purchase allows the company to position itself as a supplier to French automakers such as Renault.

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