But what's changed recently is that now they're not just feeling the competition from premium-priced guitars; they're getting squeezed from the low end, sub-$1K part of the market coming from China and Indonesia. Recently I played a Chinese made Telecaster copy that was better in terms of quality and playability than any sub-Masterbuilt Fender. The fit, finish, and fretwork were all dramatically better than any Fender I've played (Fender also manufactures guitars in China and Indonesia).
I'm a huge fan of the Esquire, Telecaster, and Stratocaster. It's a shame to see a once-great American brand get cooked by resorting to lawfare instead of QC.