It had become increasingly apparent that Epiphone was no longer capable of developing the new products necessary to capture the imagination of the guitar-buying public and its financial viability had come to an end. Following Frixo´s sudden death in 1957, Orphie, now the company´s sole owner, approached Gibson president Ted McCarty, who had previously expressed interest in buying Epiphone´s bass violin production. A deal was signed and trucks were dispatched from Kalamazoo to New York and Philadelphia to make the move. Records during this time period indicate that the out-of-work ex-Epiphone workers in New Berlin, New York "celebrated" by hosting a bonfire behind the plant with any available lumber (both finished and unfinished!). When the vans returned to the Gibson warehouse in Michigan, McCarty realized (much to his surprise) that not only had he received the bass-making operation, but all the jigs, fixtures, and machinery necessary for making guitars, plus much of the work in progress. For the sum of $20,000, Gibson had acquired its once mighty rival (including what would become the most profitable trademark) lock, stock, and barrel.
It was decided that Epiphone would be re-established as a first rate guitar manufacturer, so that Gibson's parent company CMI (Chicago Musical Instruments) could offer a product comparable in every way to Gibson. This was done primarily as a way of offering music stores which, due to existing contractual obligations in a particular sales area, were not allowed to carry the exclusive Gibson line. The Epiphone brand could now be offered to competing retailers who were also carrying many of the other well-known brands which were distributed by the giant CMI. Though Epiphone was set up as an autonomous company, in a separate part of the Gibson complex, parallel product lines were soon established, and Gibson was (in effect) competing with itself.
After Epiphone moved to Kalamazoo, instruments were built in the U.S through 1969. Epiphone boomed along with Gibson during the mid-1960s, but by the late 1960s, the guitar boom had busted. In 1969, Gibson only shipped 2,526 Epiphone guitars, which was 86 percent drop from only four years ago. Gibson also found that Epiphone was actually competing with itself for sales. To make things worse, Gibson's parent company CMI, was hurting financially and in the last few days of 1969, ECL bought CMI. By this time, Gibson was already looking for a way to keep Epiphone afloat and importing guitars with Epiphone on the headstock seemed to be the only answer.
After about a year of researching imported guitars, Epiphone production was entirely moved overseas. Instruments were originally built by the Matsumoku factory (of Lyle fame) in Japan between 1970 and 1983. At the time, Matsumoku was considered the second best Japanese producer only behind Ibanez. In the fall of 1970, an entirely new line of Epiphone-branded guitars was introduced, but they did not resemble old Epiphones in the least bit. In fact, most of these guitars were already in production for other trademarks and Epiphone was simply applied to the headstock. Epiphone spent the first part of the 1970s without much identity, but throughout the 1970s, more individual models were introduced. The FT and PR series of acoustics sold relatively well, and Epiphone showed some creative prowess with the Scroll and Genesis Series electrics and the Nova acoustic series. Epiphone also introduced reissues of their popular electric archtop models (Casino, Emperor, Riviera, and Sheraton) in 1982.
By the early 1980s, it was evident that Japanese production was becoming too pricey due to the changing ratio of the dollar/yen. Norlin shopped production and by 1983 it had moved to the Samick factory in Korea. Production remained in Korea largely through 2004, although Epiphones have been produced in a variety of factories and countries over the years. The mid-1980s is a cloudy time for Epiphone, mainly because of the struggles Gibson was going through. When Gibson was sold to Henry Juszkiewicz, David Berryman, and Gary Zebrowski in 1986, not much was going on with Epiphone. With the boom of Asian-built guitars in the late 1980s, Gibson's new ownership group jumped on bandwagon and began rebuilding Epiphone. Instead of introducing a line of original or other manufacturers copied models, Gibson used Epiphone as sort of a budget brand. By the late 1980s, Les Pauls, Flying Vs, and SGs were being produced with an Epiphone logo! Epiphone has also returned to its roots by offering several reissues of their popular guitars of the 1950s and 1960s.
In 2003, Epiphone introduced the Elitist Series, which is designed to be a premium line of guitars based on popular Gibson and Epiphone models. In 2004, all production of Epiphone guitars moved to either China or Indonesia.
Source: N.Y. Epiphone information by L.B. Fred and Jim Fisch, Epiphone: The House of Stathopoulo, additional Epiphone history courtesy Walter Carter, Epiphone: The Complete History.