Garlemald was able to overwhelm their opponents because no one knew what magitek was or how to defend against it. Now that's no longer then case (thanks Cid) and the people they fight against know what magitek is and how to plan for it/around it. Oh, and their opponents are also better then aether manipulation then they are...

I see it less as that Garlemald is incompetent and more that the people they have been fighting against have figured out how to make their tech less effective then it was. Cid growing a conscious and sharing the ceruluem engine was a serious blow to their superiority.