John Onoda today sent a shockwave through the audience at the Council of PR Firms “Critical Issues Forum” when he questioned the viability of the big PR agency model.

The PR veteran of Charles Schwab Corp, Visa USA, General Motors and Levi Strauss recalls sitting in large meetings at GM more than a decade ago where executives saw nothing but blue skies ahead for the company. GMers believed they were on top of the world. Nothing could bring down America’s No. 1 automaker. It boasted of huge scale, global reach, solid market share, easy and cheap access to capital and robust manufacturing operations. The future seemed bright indeed.

Cut to today. Onoda said GM is now “irrelevant.” Talk of growth does not exist. Instead, GM is staving off bankruptcy and busy trying to arrange a shotgun marriage with Chrysler to get its mitts on the cash hoard of Detroit’s No. 3 car company.

Compared to GM, PR is mere “spit in the bucket,” according to Onoda. It’s a business that could disappear in the blink of an eye. Onoda—though short on specifics--called for a “radical realignment” of the business. PR's future is dicey. It has much to worry about due to the huge “global mash-ups” of companies, governments and NGOs combining talents and financial might to tackle healthcare, education, environment protection, energy and economic development. Where does PR fit into that equation? No agency can match the firepower of those mash-ups. Onoda also said Big PR faces intense pressure from management consultants like McKinsey, which is muscling into its territory.

Big PR will also suffer due to the shrinking role of the U.S. on the world’s stage. Onoda said audience members have a liberal and western orientation that does not jive with emerging markets like Russia, China and Japan. For example, the Putin Government has support among Russians though it goes about murdering journalists. Western PR practices will further diminish, in Onoda’s view, with the rise of the “bottom billions” of consumers.

Onoda, who consults for Fleishman-Hillard, spoke before a audience that including sponsored tables from giants like Burson-Marsteller, Hill & Knowlton, Ketchum, Porter Novelli, Waggner Edstrom and Weber Shandwick. (Smaller shops CooperKatz & Co and Marina Maher Communications also bought tables.)

Harris Diamond, WS CEO, challenged Onoda’s contention that big PR firms are toast. He said creativity provides PR the edge over consulting firms. He has yet to see a management consultant outfit brimming with creativity.

Diamond noted that Barack Obama didn’t turn to a management consultant to design his campaign. Team Obama did turn to Shepardson Stern + Kaminsky, which is staffed by veterans of the legendary Sawyer Miller Group, Diamond’s old shop.