At the time of his retirement from Holden in 1987

ONE of the most influential leaders of GM Holden in Australia, Charles “Chuck” Chapman, died in his native United States in December, aged 86.

Mr Chapman, an engineer who started at Buick, was appointed managing director of GMH in 1976 after having spent nearly a decade reviving the fortunes of GM’s European division, Opel, by using innovative engineering and designs to make the company’s European cars less conservative, livelier and safer to drive.

During his time at Opel, the brand became market leader, even outselling brands including Volkswagen on their home turf.

At Holden, Mr Chapman found a company adrift in mediocrity with poor-handling and poorly equipped cars that were increasingly being mauled by European and Japanese designs.

He found key management displayed an arrogant belief in the superiority of Holden, in spite of the fact that no directors, out of misplaced loyalty, ever drove competitive cars. He quickly organised drive days at the proving ground at Lang Lang near Melbourne to appraise them of the awful truth.

Slack punctuality of senior management was brought into line by Mr Chapman, who would start meetings in an empty room. As managers dribbled in, they would be told by Chapman what had been decided in their absence without their input.

Mr Chapman was also the first head of Holden with the courage to start closing the plethora of GMH assembly plants that had prevented the company gaining production scales of economy.

The closing of the Pagewood plant in Sydney was particularly painful for Mr Chapman, who took the brunt of brutal criticism from all sides of politics and a ferocious media outraged at the loss of jobs in Sydney.

He found out why others had avoided the issue, but ultimately Holden also closed plants in Dandenong in Melbourne and Acacia Ridge in Brisbane, with all assembly concentrated at Elizabeth in Adelaide.

To revive product, Mr Chapman quickly imported expert engineers from Germany, including his Opel engineering lieutenant, Joe Whitesell, and a young engineer named Peter Hanenberger, who would years later also become head of Holden and set up major export programs for Holden into the US and the Middle East.

The new team set about moving on the old-style engineers who were clinging to outdated technology. They quickly improved the handing and safety of the Holden Kingswood and Torana by optimising suspension around radial-ply tyres with the renowned Radial Tuned Suspension program.

Mr Chapman with then Prime Minister Malcolm Fraser and the original Opel-based Holden Commodore

On Mr Chapman’s watch, the Commodore – smaller than the Kingswood and based on an Opel – was launched in addition to the Kingswood to cover Holden against any swing to smaller cars due to rising fuel prices in the 1970s. The four-cylinder Camira followed as concerns mounted that oil would only last a few more decades.

Mr Chapman built the Family II four-cylinder engine plant at Fishermans Bend that went on to be Australia’s leading exporter of manufactured goods for decades, exporting hundreds of millions of dollars worth of engines a year.

This export program was linked to an export credit scheme under which the value of Holden exports was credited to the value of Holden imports, thereby reducing import duty liabilities and making Holden more competitive against imported cars paying the full level of duty.

However, the plant was funded by a then novel leverage leasing deal that turned sour under huge unplanned surges in interest rates that began sucking the life out of Holden’s ability to pay its way. Holden accumulated losses of around $600 million in the early 1980s.

In 1986, Holden required a massive bailout of $750 million from GM in Detroit and the demoralised company chose to join with Toyota Australia in a joint-venture company called United Australian Automotive Industries Ltd (UAAI), sharing plants and rebadging each other’s cars.

The last Holden developed under Mr Chapman was the VN Commodore. Ironically, in spite of little cash to fully develop the wish list of Mr Chapman’s team, the VN became so profitable that Holden became the dominant partner in UAAI and Toyota fell into losses. The deal was unravelled after just a decade.

One of Mr Chapman’s most difficult tasks was to split Holden from its star racing driver, Peter Brock.

While all the market research showed that Brock and Holden were welded at the hip in the minds of the public, Brock began risking Holden’s credibility by producing Brock-HDT road cars without Holden approval and with a device known as a “polariser” said to draw on mystical powers to make the car run better and improve the handling.

Under a plethora of engineering and legal advice, Mr Chapman had little choice but to end the relationship between Holden and the obstinate Brock.

During his stewardship of Holden, Mr Chapman became responsible not just for Australia and New Zealand, but for South East Asia, and was also appointed a vice-president of General Motors. He retired from Holden and General Motors in 1988.

When Mr Chapman left Australia, he left behind him a string of losses. Some have taken this to be a stain on his performance.

However, his legacy was that he was the first American in charge at Holden game enough to make the changes necessary to take Holden by the scruff of the neck and set it up for the more competitive industry that was to come.

Holden made a profit for 17 straight years after Mr Chapman’s watch, accumulating some $4.3 billion in pre-tax profit for Holden in that time.

Mr Chapman willingly paid the price that most others in his position were not prepared to pay because of the potential damage to their careers caused by red ink that was necessary to make the changes required.

By John Mellor

Trailblazer: Chuck Chapman oversaw a major turnaround at GM Holden in the 1970s and 80s.