There was a piece, on Martin Guitars, on NPR's Morning edition radio show, last Friday. It was interesting because they talked about the change in quality and the introduction of automation into the manufacturing process.
C.F. Martin IV attributes the drop in quality to his father's policy of making Martin into a global conglomerate, instead of concentrating on their core business. Chris is known to be responsible for bringing the focus back around to making quality guitars and for getting into the lower end market, with new models.
The market was pretty dead, in the 80s, but it has been revived lately. In 1980 Martin made 3,000 guitars; in 1998 they made 55,000. The automation has enabled them to increase productivity per worker and to get better, more consistent quality.
Some people say that this is another "Golden Age" for Martin, and that they are making even better guitars now than they did in the 30s and 40s. After all, they didn't have adjustable truss rods back then.