The Man Who Saved The Cadillac

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As for Cadillac, it was losing so much money that the only question was whether to kill it outright or to keep its name alive and wait for better times. The executive committee of the board of directors was meeting to decide its fate when Nicholas Dreystadt knocked on the door of the boardroom and asked to be heard for ten minutes.

Dreystadt was an unlikely GM executive. He had come to this country from Germany in 1912, at the age of twenty-two, after working as an apprentice for Mercedes-Benz, and he always spoke English with the broad accents of his native Swabia. He favored tweed sport coats—spotted with burn holes from his ever-present pipe —rather than business suits. His secretary kept a pair of men’s dress shoes handy for the days when Dreystadt showed up at the office in shoes that did not match. A gifted mechanic, however, by the early 1930s he was in charge of Cadillac service nationwide, a middle-management position of responsibility but no real importance in the politics of General Motors. So for someone like Dreystadt to crash a meeting of the GM executive committee might roughly be compared to a monsignor knocking on the door of the Sistine Chapel to make a suggestion to the College of Cardinals while it was busy electing a pope.

But Dreystadt said he had a plan to make Cadillac profitable in eighteen months, Depression or no Depression. The first part of his plan resulted from an observation he had made traveling around the country to the service departments of Cadillac dealerships. Cadillac was after the “prestige market,” and part of its strategy to capture that market was its refusal to sell to blacks. Despite this official discrimination, Dreystadt had noted that an astonishing number of customers at the service departments consisted of members of the nation’s tiny black elite: the boxers, singers, doctors, and lawyers who earned large incomes despite the flourishing Jim Crow atmosphere of the 1930s. Most status symbols were not available to these people. They couldn’t live in fancy neighborhoods or patronize fancy nightclubs. But getting around Cadillac’s policy of refusing to sell was easy: They just paid white men to front for them.

Dreystadt urged the executive committee to go after this market. Why should a bunch of white front men get several hundred dollars each when that profit could flow to General Motors? The board bought his reasoning, and in 1934 Cadillac sales increased by 70 percent, and the division actually broke even. In June of 1934 Nick Dreystadt was made head of the Cadillac Division.

He proceeded to revolutionize the way luxury cars were made. “Quality is design and tooling,” he said, “inspection and service; it is not inefficiency.” He was willing to spend money on superior design and better machine tools. He was willing to spend even more on quality control and top-notch service departments. He was not willing to spend money on production itself.

“Nick made us look closely at everything,” one Cadillac executive remembered. “If someone else made a part for two dollars, why did ours have to cost three or four?” In less than three years of this attitude at the top, Cadillac’s production costs were no higher, per unit, than those of General Motors’ low-end Chevrolets.

And because Cadillac still sold for luxury prices despite its drastically reduced production costs, it had become General Motors’ most profitable car per unit. In still-depressed 1937 more Cadillacs were sold than in roaring 1928. It is ironic that twenty years later Dreystadt’s first employer, Mercedes-Benz, would use his technique of applying mass production to luxury automobile manufacture to transform itself from a marginally profitable boutique operation into the very model of the modern luxury car maker.

But Nicholas Dreystadt would never know that irony. His astonishing turnaround of Cadillac put him on track for big things at General Motors; in 1946 he was made head of Chevrolet and was far and away a major contender for GM’s presidency in a few years, but just two years after moving to Chevrolet, he succumbed to throat cancer at the age of fifty-eight.

But for that cruel fate the whole history of the American automobile industry over the last fifty years might have been very different.