Although Henry Ford and his next company revolutionized the way in which mass-market cars were built, luxury cars such as Cadillacs were still made the old-fashioned way, more or less one at a time. The 1920s, of course, were the golden age of luxury automobiles, vehicles of such beauty and style that they still move the hearts of even the most non-mechanical. But the onset of the Great Depression caused the automobile market as a whole to shrink drastically, while its luxury segment virtually collapsed.
In 1928 General Motors manufactured 1,709,763 vehicles in the U.S., of which 41,172 were Cadillacs. By 1933 GM production was down to a dismal 779,029 vehicles, a decline of more than 54%. But that year Cadillac sold only 6,736 cars, a decline of fully 84%.
General Motors showed a profit every year of the Great Depression, but it did so only by ruthless cost-cutting. Buick, Pontiac and Oldsmobile were collapsed into one division, for instance, to save managerial overhead.
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 10 minutes.
Dreystadt was an unlikely GM executive. He had come to this country from Germany in 1912 at the age of 22 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 18 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 African-Americans. 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 African-American 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%, 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 $2, 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
