Apologies ... I got sidetracked and then lost the plot on this scenario
To make up for lost time, I'm going to omit the non-aviation related details - eg: of how an Australia-Japan Trade War was averted or how Sir John Greig Latham became Australia's Minister for Japan earlier than in OTL - and jump straight into the tangible, aviation-related result.
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[...] The Ki-27 found no place within Australian military plans. However, through casual conversations with Nakajima design staff, it became apparent that more potent fighters would soon be deployed. Such a fighter might well suit RAAF needs. Officials at Nakajima were apologetic but, on orders from the Ministry Of War, they were unable to give access to the latest Imperial Japanese Army fighter or even provide details of its design. A deadend had been reached. It seemed that the Nakajima company was eager to export its engines but had little influence over the Japanese high command when it came to offering airframes.
Still, an opportunity was seen to improve Australian capabilities for any coming war. To that end, the mandate of the Department of the Interior was expanded to include the active promotion was armaments production in the Commonwealth. The Department's Bureau of Aircraft Production was established to oversee domestic aviation capabilities in support of the RAAF. To that end, in mid-1938, the BAP invited the Nakajima Aircraft Co. (Nakajima Hikoki K.K.) to create an Australian division capable of assembling engines to suit RAAF needs - ie: to Imperial measures, with British Standard fasteners, etc. The Nakajima engines of interest were the single-row Ha1 Kotobuki and the twin-row Ha25 Sakae.
Nakajima officials investigated Melbourne for their future site. In July 1938, Cooper Engineering Co. of Sidney accepted an offer for their Melbourne branch. [1] This downtown site became the headquarter and experimental workshop for the new Middle Island Aeronautical Pty. Limited (middle island being a translation of Nakajima). Initially, detail work for 'MIA' was performed by a range of local industrial firms - including local castings by C.B. Dawson and McMillan’s of Brunswick, forging by Royal’s Axles of Carlton, with grinding and machining by Davidson’s and A. Craig Pty. Ltd. But most components were imported directly from Japan.
Nakajima was slow to get Imperial Japanese Army approval for the export of Ha25 Sakae components but there were few restrictions upon transfers of the Ha1 Kotobuki. Accordingly, MIA began with Ha1 component modification and assembly. Locally-produced Ha1 Kotobuki became the MIA R-1470 Princess (although that marketing name was quickly dropped). [2] The MIA R-1470 produced 710 hp for take-off and 780 hp at 9,500 feet. This was seen as a useful increase in power over the 600 hp Pratt & Whitney Wasp then being installed in early-production CAC Wirraways. To test that theory, Commonwealth Aircraft was provided with a Japanese-built Nakajima Ha-1b Kotobuki Otsu for installation in a Wirraway aiframe.
Bottom CA-1 Wirraway conversion to CA-10 standard. Wirraway A20-5 shows its revised cowling and Nakajima-provided constant-speed 2-bladed propeller. Fixed armament consists of twin, sychronized Type 89 machine guns - Imperial Japanese Army copies of the Vickers Class E.
Sufficient MIA R-1470 engines were supplied to begin interspersing CA-10 Wirraway 'interim combat aeroplanes' on the Commonwealth Aircraft production lines. It was believed that these higher-powered aircraft would have a superior chance of success in the light recce-bomber role than the Pratt-powered CA-1 and CA-3 Wirraways. This would be borne out in combat but the CA-10 Wirraway still had a marginal performance.
In the Autumn of 1941, plans were made for an MIA R-1690 (Sakae)-powered Wirraway to replace the CA-10. Despite slow export approvals in Tokyo, MIA established a good reputation. Not only was work on the R-1470s completed quickly, the Nakajima engines were considerably cheaper than CAC-built Wasps. But this hard-won reputation vanished overnight with the Japanese attacks of December 1941. Most critically, the supply of components and raw castings came to an abrupt end. Worse, all Japanese MIA personnel - office staff and technicians - were interned by the Commonwealth Police in the second week of December. By the end of the month, MIA had become Melburne Industries Aeronautical, a division of DAP - the Federally-controlled Department of Aircraft Production).
Top CAC CA-10 Wirraway of No.21 Squadron RAAF based at Sembawang airfield on Singapore Island in December 1941. While attempting to intercept Japanese bombers, Wirraway A20-39 was shot up by IJN A6M2 fighters over the Singapore Strait. With his gunner - Sergeant Ellis - wounded, pilot F/O D.J. Doughty shook off the 'Zeros' and successfully recovered to Sembawang. However, the aircraft was a write-off.
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[1] This sale help finance Cooper Sydney's build of a new factory at Mascot, NSW.
[2] In Japanese, mia means 'princess' (while Kotobuki means 'long life').