While Colt Manufacturing enjoyed uninterrupted prosperity from the mid 19th century to the late 1980s, the appearance of a new decade marked a series of issues for the acclaimed gun makers. The biggest problem was actually not related to the Colt guns, but had more to do with the economy and other external factors. As the Cold War drew to a close, the nation found itself in an economic downturn and firearm purchase was on the decline. To stop the financial bleeding, the Colt Manufacturing Company looked towards military sales to make up the lost revenue. With military spending on the rise, it seemed like this would be a good idea.

However, the next problem to hit was a strike in 1986 by workers at the factories that were scattered across the country. The strike lasted for more than four years, making it one of the longest strikes ever recorded in American history. During this time, the military contract to produce assault rifles was moved to a French company to avoid interruption to the current orders. Although Colt Manufacturing hired replacement workers to fill in during the strike, the quality of the product moved to a new low and the military could not afford weapons that were not in operating form.

At the end of 1992, the manufacture of cheap guns for sale came to a close and Colt Manufacturing enrolled in chapter 11 bankruptcy to protect its assets. The troubles for the company were not yet over and a boycott was started in 1994 to protest the decision of the company to support the government system for gun licenses. The Colt boycott lasted for several years and new employees like Donald Zilkha and William Keys worked hard to bring Colt Manufacturing back from the grave to acclaimed revolver production.