As solidbody guitars rose to prominence in rock, with the harder styles of the era favoring Fender Stratocasters and Gibson Les Pauls, use of hollowbodies fell in popularity. At that time, drum production was relocated to Ridgeland, South Carolina, where it remains today.
In 1979, after Fred Jr's death, Chet Atkins withdrew his endorsement in response to quality problems and Gretsch's unwillingness to pursue his vision of a nylon-stringed electric guitar. The first new guitar model introduced was the Traveling Wilburys model - an Asian import - which looked much like a Danelectro.
The 5120, a single-cutaway model inspired by the 6120, became the best-selling guitar in Gretsch history.
The double-cutaway 5122 model, introduced in 2008 and inspired by the 6122 Country Gentleman, filled out the Korean-built Electromatic Hollow line.
Gretsch also introduced models with features intended to attract modern players, including TV Jones pickups, locking Sperzel tuners, and "ML" bracing designed by Mike Lewis of FMIC and Masao Terada of the Terada company in Japan, where all Gretsch Pro Series guitars are built.
FMIC discontinued the low-end bolt-neck Electromatic models of the late 1990s and early 2000s.
These were actually manufactured by Valco, and have become sought-after in the years following Valco's demise.
During the "Baldwin era", new models were introduced throughout the 1970s and old favorites continued to be produced.
After numerous failed attempts to acquire facilities or contract production in the United States, Fred Gretsch and long-time Gretsch employee Duke Kramer, who advised Gretsch, turned to Terada of Japan, and production began there.
The renewed Electromatic Hollowbody line became successful, from the 5125–5129 series (with U.
S.-made De Armond 2000 pickups) and the similar 5120 series.
Johnny Marr, Martin Gore, and Matthew Ashman played Gretsch guitars.
In late 2002, Gretsch and the Fender Musical Instruments Corporation reached an agreement giving Fender most of the control over marketing, production, and distribution of guitars, with the Gretsch family retaining ownership of the company.