And despite the size of GM (per your numbers which I wont dispute) $500,000 in the late 30s is about 12 million in today's dollars. I don't know if you actually worked in the aviation manufacturing industry, but I seen managers canned for not making profit margins, let alone losing a fraction of that amount.
I can see GM allocating $500,000 to Allison in the second half of the 1930's given what it was going in Australia, putting in about half that amount to start Australian aircraft manufacture from basically scratch in October 1936 on the promise of an order, which took until April 1938 to be signed and then was for a whole 40 trainers.
In 1934, after a DC-2 came second (but first on handicap) in the Britain Australia Air Race, the RAAF Chief of Staff and the Minister of Defence separately asked General Motors in Australia (GMH or General Motors-Holden) whether there was any interest in building the DC-2 in Australia, but GM had sold out of Douglas.
In early 1935 a proposal was put to build aircraft and their engines in Australia, the Commonwealth Government convened conferences as well as industry undertaking discussions including using a Government appeal for such a company to convince shareholders to put together a local manufacturing syndicate with the funds and expertise. GM was one of 3 companies that in 1935 contributed 12,000 pounds each, about 48,000 dollars to start things, like sending a mission around the world to see what designs were available. Assurances were needed about tariffs and access to facilities, and recording the government promises. Military and civilian aircraft were to be made in that order and exports were also mentioned both airframes and engines to be locally made, plus a factory complex needed to be built.
As Australia was assembling motor vehicles, not making them, this was a major step up in manufacturing capacity, given at the end of 1930's when the ex WWI imperial gift aircraft required overhauls (many had been stored in tents with dirt floors) Australian industry lacked the capacity nor had the interest in acquiring the capacity to do the work. Not without lots more aircraft to work on. As of 1 January 1935 the RAAF had 69 aircraft, plus 28 on order or in storage. A mid 1930's contract for overhaul of Moth and Wapiti wings received 1 high price reply, admittedly the wings had to be repaired in Victoria, not shipped interstate, which cut the possible numbers of replies.
The long term aim was complete manufacture of aircraft by Australia using mostly Australian raw materials. In February 1936 Wing Commander L.J. Wackett, Squadron Leader H.C. Harrison (technical man) and Squadron Leader Murphy, RAAF Chief Workshop Operator were sent on a 5 month tour to visit overseas aircraft industries to determine what design to manufacture. Italy, France, Germany, Czechoslovakia, Holland, Britain and the United States were visited.
The framework being it was expected it would take 5 years from industry initiation before manufacture of a first line defence aircraft could be made (under peacetime conditions), so it was best to start with a simpler design that would a) use Australian raw materials, b) establish manufacture that would be applicable to other aircraft types, c) achieve being able to manufacture a range of aircraft types as quickly as possible, d) introducing designs that would lend themselves to good jigging and tooling so in an emergency production of larger quantities could be carried out by semi skilled labour. A radial engine was preferred as easier to build.
The first design should use as much steel as possible given 1936 Australia had plenty of steel but lacked reliable supply of non ferrous alloys, aluminium and magnesium. The design should be made by regular workshop personnel given the wartime need to significantly increase output. The design should incorporate features likely to be standard practice for some time, a) stressed skin wing and construction, b) all metal construction, c) low wing monoplane type, d) retractable undercarriage, e) variable pitch propeller.
The result was the choice of the North American design, British types of better performance in terms of defence capabilities had not been successfully and easily produced in quantities. The British offered the Fairey Battle light bomber (production started in May 1937) and the Westland Lysander Army Co-operation aircraft (production began in May 1938). The North American design first production, as the BT-9, was in July 1936. The single row Wasp engine it used of around 500 HP could be turned into a 1,000 HP twin Wasp with some redesign but built using the same machine tools and fixtures.
In September 1936 the Australian government told the British what was going to be built. The Commonwealth Aircraft Corporation formed on 17 October 1936, taking over the Tugan company along with its personnel and building a new factory in Melbourne on Victorian Government land. Essington Lewis was Chairman of the company and Lawrence Wackett was appointed Manager. The authorised capital was £1,000,000 paid up to £600,000. The shareholders were
Broken Hill Proprietary Company Ltd £200,000
Broken Hill Associated Smelters Pty Ltd £150,000
Imperial Chemical Industries of Australia and New Zealand £90,000
General Motors-Holden's Ltd £60,000 (Around US $240,000)
The Electrolytic Zinc Company of Australasia Pty Ltd £50,000
Orient Steam Navigation Company Ltd £50,000.
GM was originally going to have 25% of the company, that was wound back to 16 then 10%, given the politics of British is Best, with ideas like GM was really there to acquire knowledge of the inevitably superior British designs and engineering or it was there to force the purchase of the North American design. Offers to British firms to replace GM were made, they were ignored or replies were along the lines of "only if you build our designs".
In January 1937 the government indicated it would order the North American design as the Wirraway, subject to the usual contract negotiations being successful. Construction of the Melbourne factory began in April 1937 and the initial buildings were ready for occupation in September, further expansions occurred pre war, a near doubling of the floor space. An example of the fixed undercarriage version of the design arrived in Australia in August 1937, one with retractable undercarriage in September. An order for 40 Wirraway including engines was approved in January 1938 and the contract signed in April 1938, the Wirraway name made public on 6 April 1938, the first engine was built in January 1939, the first Wirraway flight on 27 March 1939, official delivery in July, by end July 8 engines had been officially produced, by the end of 1939, 33 Wirraway and 36 engines.
A lot of money spent before any order and the size of the order was too small to recoup the investment, though an order for an extra 60 Wirraway was approved in September 1938, plus an order for 2 prototypes for a CAC designed trainer in October. The original GM shareholding was controversial and the outcry increased when the Wirraway was chosen, plenty of chances for and pressure on GM to sell their holding. And while the RAAF was becoming increasingly concerned about deliveries of aircraft ordered from Britain as the 1930's went on it was mainly confined to combat types, not trainers. Then in mid 1939 a new wholly public owned operation, the Government Aircraft Factory, was set up to manufacture the first combat type, the Beaufort rather than contract CAC to build it, with part of the reasons for doing so the GM holding in CAC.