USA factories were producing 17,000 General Aviation aircraft per year in 1978-1979. By 1983 that had dropped to 2,700 and by 1987 to 1,000 per year - which is where it has stayed pretty much ever since, with a bit of a blip from 1998 to 2008 where it was 2,500-3000 per year, in part due to the introduction of
The General Aviation Revitalization Act of 1994, which limited product liability on aircraft over 18 years old.
That big drop at the end of the 70's was due to a couple of factors. USA airline dregulation over the next couple of years dropped ticket prices and increased flight availability to the point that the business case for owning an aircraft faded rapidly. The airways became conjested with airliners in the new system, and the market was saturated with the huge single-engine over-production at the end of the 70s.
In the early to mid 80s the product liability lawyers also had a field day - Piper went broke and Cessna stopped making singles. The average cost of manufacturer's liability insurance for each aeroplane manufactured in the U.S. rose from approximately $US 50 per plane in 1962 to $US 100,000 per plane in 1988. There was a second oil shock in 1979 and then another recession slowed the economy in 1980.
In 1978 one Australian dollar was equal to $1.14 US dollars. Prior to 1983 the value of our currency (the Australian pound then, after decimalisation, the Australian dollar) was always pegged to that of another currency (the British pound, then the US dollar), and then a moving peg in relation to a basket of currencies. When the Australian dollar was floated in 1983, the Aussie dollar value rose for a few weeks but then slowly dropped over the next two years until it stabilised around 77 US cents where it roughly stayed for the next decade. Since the float, the Australian dollar has fluctuated from a low of 47.75 US cents in April 2001 to a high of US$1.10 in July 2011.
So - massive liability increase in price, manufacturing increases with loss of economies of scale, falling Aussie dollar value, recession, cheap airline airfares. Perfect storm, really.