EY’s Jerry Gootee On The Exciting Developments In US High Tech Manufacturing

The global shortage of computer chip manufacturing has highlighted the urgency for the US to have a robust High Tech Manufacturing sector. As a result, the Biden administration has signed a bill to boost chip manufacturing in the US. In addition to computer chips, what other exciting advancements and innovations are US companies making in High Tech manufacturing? What is coming out in the near future? What would it take for the US to become a High Tech Manufacturing powerhouse? To address these questions we are talking to leaders of High Tech Manufacturing industries. As a part of this series, I had the pleasure of interviewing Jerry Gootee.

Jerry currently serves as EY Global Advanced Manufacturing Sector Leader and Ernst & Young LLP Global Coordinating Service Partner on several global accounts in the sector.

With over 27 years of experience helping global organizations with their auditing, tax, transactions and consulting needs, he has led and coordinated projects across functions and domains such as robotics and process automation, finance and back-office transformation, site selection, external and internal audit co-sourcing and controls support, supply chain transformation, tax planning and incentives, M&A due diligence and post-merger integration services and global mobility services.

Previously, he served in many Americas and global leadership roles, including Akron Office Managing Partner, Ernst & Young LLP and EY Global Innovation, Markets and Communications Leader.

Jerry received a BA in Accounting from the University of Louisville. He is a Certified Public Accountant and serves on several boards and committees.

Thank you so much for joining us in this interview series! Can you tell us a bit about your ‘backstory’ and how you got started in manufacturing?

Manufacturing is in my blood to a certain extent. Growing up in Louisville, both my parents worked in manufacturing. My father worked for General Electric making dishwashers in what was one of the largest manufacturing plants in the world at the time and my mother worked on the line making Ford Explorers. I remember she would take every overtime shift available. I started out in audit and advisory services, but I’ve still ended up coming back to manufacturing. Maybe it was inevitable.

I have been working at EY since 1991 and I’ve been in the manufacturing heartland of Northeast Ohio since 1997 when I arrived as an industry analyst, so I’ve been steeped in manufacturing ever since. I’ve been involved in a number of roles in that time, from auditing to market and account leadership roles to business advisory, which have really allowed me to have a holistic understanding of manufacturing businesses as well as the way the sector operates. During this time, I have led key global accounts including a well-known Akron-based tire brand as well as becoming managing partner of EY’s Akron office before moving into my current role as EY’s Global Advanced Manufacturing Leader.

As part of this global role, I co-founded the EY-Nottingham Spirk Innovation Hub in Cleveland, working with local innovation firm Nottingham Spirk and EY alliance partner companies to fulfil a personal dream of bringing a world-class innovation center to NE Ohio. The Hub officially launched in October 2021 and we’re really pleased with how it has gone. We’ve had great reviews from our global clients and industry analysts, and since its grand opening, we’ve had more than 800 senior global executives come through the Hub for exclusive, cutting-edge experiences around the future of manufacturing across the entire value chain — from new product development to supply chain and manufacturing to sales and service and more recently new business models.

Can you share the most interesting story that happened to you since you began your career?

I can honestly say that the most interesting part of my career is the one I am in right now. I’ve realized my dream of opening the Innovation Hub in Cleveland and through the Hub, we’re working with first-to-market companies in critical industry markets on some exciting and transformational projects. For example, we’re helping an organization take a leap position, define its ecosystem platform, and develop a new value proposition and business model that’s ultimately redefining an entire industry market and creating more value for the organization and its customers. I can’t share too much about it at the moment, but maybe I can come back and talk to you about it once we’re ready.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

When I was a young professional, I had the opportunity to meet a board member of a very large manufacturing company, he shared with me a story that has always guided me and one I think about often as I tackle day-to-day challenges. I’ll give you the short version which started with a young man (I’ll name him Joe) that worked incredibly hard and always strived to be his best. Joe was always quick to take on tough assignments, always too busy for small talk in the office, always produced, in his opinion, the most and highest quality output. As Joe prepared for his annual review, he never felt more confident. No one could question how much he had delivered for the Company. Sitting down, his boss with a big smile congratulated Joe for a strong year and shared with Joe that he likely had done the work of at least 2–3 professionals. Joe was beaming and ready for his big raise. Then, Joe’s boss leaned in and said, I bet if you would have used your energy to take the time to get to know and work more closely with your team, you and your team could have done the work of hundreds of professionals. The tone had changed, Joe’s focus on his own individual contributions versus the teams were put in true perspective. This story has always stuck with me and taught me the value of needing and being an energy source for something much bigger than self. To this day, my favorite day is working and accomplishing big things as a team!

Ok wonderful. Let’s now shift to the main focus of our interview about High Tech Manufacturing. Can you tell our readers about the most interesting projects you are working on now? How do you think this will help people?

A year ago, we opened the EY-Nottingham Spirk Innovation Hub here in Cleveland. This is a truly unique space, allowing us to solve manufacturing problems end-to-end. We bring together people, software, and hardware in a real-world production environment. So you can visualize and then experience your solutions both physically and virtually, all in the same place.

In the past, you would design your solution or business model, then you’d wait weeks or months perhaps to wait for a prototype, run tests, report back, iterate and repeat. At the Hub, you can innovate and ideate upstairs in the morning, and then you can go build, model, run and test your ideas downstairs in the afternoon. So we find new solutions, and then bring them to life by rapidly modeling or prototyping them, and then we’ll help you deploy them in the real world.

Companies come to us with strategic issues like “how do we use digital to drive our growth agenda,” “are we in the right businesses?” or “do we have the right product portfolios for our future?” — or more tactical problems like “how do we improve supply chain or get closer to our customers?”.

There’s no better or faster way to turn great ideas into everyday business outcomes. And we’re doing all this with a 95% commercialization success rate. It’s a really exciting place and I urge folks across the manufacturing sector to come to us with their toughest challenges and see it for themselves.

From your vantage point as an insider, what exciting developments will be coming out in the near future?

Right now we’re working with manufacturers to help them apply AI to solve some of their most urgent problems. AI is enabling companies to manage their inventories more effectively. That’s a critical competitive advantage when supply chains are constrained. AI can also help manufacturers break down some of the silos in their finance and tax systems and be much better prepared to respond to external market disruptions such as changes in regulations. With AI, companies can gain all kinds of new insights from their own data. Yet we also see that companies need help in finding the best way to benefit from AI. We did a survey with Microsoft last year in which we found that only 10% of businesses have specific initiatives and responsibilities in their AI plans. AI needs more than just software; it needs leaders to be clear on its objectives and the right people to lead it.

Automation is becoming a higher priority for manufacturers as a response to the labor shortage. In our CEO Outlook survey earlier this year, manufacturing CEOs told us that automation and technology are now their number one strategic driver for profit margins because of their impact on labor costs. Automation also provides opportunities for workers to hold jobs that are more satisfying and provide better career growth. These jobs reward analysis, communication and decision-making skills.

We know digital transformation is high on CEO agendas. In our survey, CEOs told us it was the second highest area attracting attention and resources after investing in existing businesses. So we expect to see exciting things happening in this area for some time.

Looking ahead, we see a lot of promise in areas such as edge computing. If data is going to be central to manufacturing, we need the computing resources that will help us get the best insights from it. We also see potential in the metaverse for manufacturers, especially when it comes to collaboration and developing new products and services.

In addition to what you are working on, what other exciting advancements and innovations are US companies making in High Tech manufacturing?

As I’ve outlined above I think the most exciting things going on right now are those in digital transformation, from robotics to AI to edge computing. It is a really exciting time across the sector.

What are the three things that most excite you about the state of US High Tech Manufacturing? Why?

I think one area to be really excited about right now is the movement of additional capital into the United States. Primarily due to disruptions around the world companies have needed to move operations back to the US, to shorten and simplify supply chains and this means a great deal of investment across US manufacturing at the moment, which can only be a good thing.

Related to that, is the innovation that we’re seeing across the supply chain. This move back to the US is enabling manufacturers to be more agile, it is also putting them closer to customers, meaning they can be more responsive and improve the overall customer experience.

Finally, and again in part connected to the “reshoring” trend, we’re seeing huge appetite for robotics and other digital technologies across manufacturing to help improve efficiency and cut costs. Supply chain disruptions and record inflation are compelling firms to seek more cost-efficient solutions for their production and distribution. While reshoring factories to domestic soil stabilizes supply chains it can increase costs overall and so firms are increasingly turning to AI, robotics and IoT to help boost efficiency across the value chain.

What are the three things that concern you about US High Tech Manufacturing? What would you suggest needs to be done to address those concerns?

I wouldn’t necessarily say concern, but certainly in terms of challenges I think one of the major issues that the manufacturing sector is facing as a whole is the need to be more sustainable across the board. Outside of certain subsectors with higher public profiles (e.g., automotive or chemicals), many industrial companies have been able to fly below the radar and avoid engaging meaningfully on sustainability issues. However, the massive environmental “handprint” of industrial products and processes over their lifespans means the imperative — and opportunity — related to more sustainable solutions is clear. Simply embracing the status quo is, for lack of a better term, increasingly unsustainable. For firms that make the effort, the benefits can be significant. Companies with high ESG marks are securing valuation premiums, with chemicals and materials firms reflecting the greatest impact — a 116% valuation premium in the US and 229% in the EU. Some companies that have realized the benefit of sustainability leadership to their commercial and market performance are prioritizing further investment to stay ahead.

Secondly, there is a huge shift underway in how we think about supply chains. For years we’ve operated global, lean, just-in-time supply chains but these are now coming under increasing strain due to a series of global factors, including a global pandemic, increasing protectionism, and the aforementioned focus on sustainability. In response to ongoing pandemic-related disruptions, industrial firms in North America have begun to bring production and suppliers closer to home to reduce complexity and ease delays. This movement has been amplified by the US government’s support for domestic manufacturing and sourcing. The EY Industrial Supply Chain Survey shows a majority of US respondents (52%) say they have near- or re-shored operations in the last 24 months. Supplier base changes are even more prevalent, with 60% of US respondents saying their companies have made significant changes in this area in the last 24 months. Like the globalization wave that preceded it, the current supply chain evolution will take several decades to unfold, and it will look different across regions and sectors. However, I think two things will be true of all supply chains: they’ll need to be more sustainable, and they’ll need to be more digital. Companies are going to need to think very carefully about what benefits sustainability can offer them, while also implementing technologies that enable new revenue streams rather than focusing solely on efficiencies. It will also be vital to close the talent gap in digital fluency and navigate the challenges of emerging digital taxes.

Finally, and I think this is something that I’ve touched on already, we need to maintain the momentum when it comes to innovation. We’re seeing a shift in manufacturing at the moment where product-centric innovation is not enough, companies need to be thinking about business model innovation as well. New business models based on value creation are at the center of successful growth strategies and when value creation opportunities demand capabilities outside core competencies, manufacturers should consider building or joining an ecosystem. This is at the heart of what we’re offering at the Innovation Hub in Cleveland: an opportunity for companies to radically rethink how they’re doing business, test their theories and plans and then use the Hub’s ecosystem to take new products and business models to market. I believe this is an enormous opportunity for us to continue to drive growth across the sector.

Based on your opinion or experience, what would it take for the US to become a High-Tech Manufacturing powerhouse?

I think the three points I’ve made above are the same ones I’d make here. If we address those three elements of sustainability, supply chain and innovation then we’ll be in good shape.

As you know, there are not that many women in High Tech Manufacturing. Can you advise what is needed to engage more women in these industries?

Yes, there are many ways manufacturers can improve the gender diversity in their workforces. It starts at the top. Leaders and boards must accept that a lack of gender diversity is a critical business problem so they can lead the change. Organizations also need to measure their progress by looking at the number of women at each level, pay gaps, and whether unconscious bias is shaping hiring and promotions. Leaders can play a personal role by championing women and diversity, especially through mentoring and sponsorship. Pipelines of women leaders can be built through programs that identify, nurture and promote the best talent. Finally, manufacturers should look to other industries for ideas. EY’s research has found that the banking sector has made some of the most progress in improving its gender diversity over the past several years. These strategies played a major role in that improvement.

At EY we’ve taken a look at the top levels of leadership within our own organization and acknowledged there are too few women in those spots and also a dearth of candidates going for those roles. We’re good at recruiting men and women earlier in careers, but we know we’re losing many great talents before they reach senior level. To that end we’ve started an initiative within our Global.

Advanced Manufacturing & Mobility (AM&M) sectors to support women interested in pursuing global leadership roles in the next one to three years.

Our women’s network pairs up-and-coming women with senior directors and partners across the organization to help build their profiles and sponsor their path to leadership.

The impact of this has been excellent, and I think the lessons we’ve learned from it are:

• Recognize high-potential women in your own organization. Ask them about their career aspirations and show that she belongs.
• Who can you sponsor within your own organization?
• Talk about how to balance work and family life. Share examples of what success looks like.
• Advocate for equal pay and equal opportunity.
• Spotlight women you are grateful for. Promote women’s achievements.

We still have progress to make it in improving our gender diversity, but I’m proud to be part of an organization that is proactively taking steps to make change in this area.

Fantastic. Here is the main question of our interview. What are your “5 Things You Need To Create A Highly Successful Career In High Tech Manufacturing?

An innovative mindset — Innovation is one of those words that is thrown around way too often with too little substance. Most companies and people lose the innovation edge over time, the risk of doing something unproven feels too high and uncomfortable. What I see too often are companies at the top playing the “playing it safe game” whereas companies outside their sectors, especially the tech players, looking to move into new markets with more innovative products, services and business models. Think all things connected, too many manufacturers continue to focus their capital and energy on “the make” and are missing the strong leverage they have to own both the make and the serve leveraging the power of connectivity and data in their own products. It is critical for us to maintain our innovation edge in this environment where technology and knowledge are accelerating so quickly.

An unquenchable thirst for learning — Everything is moving so fast, what used to be measured in decades are now measured in years and months. Technology is rapidly changing what is possible and information can quickly be translated into insights and competitive actions. Learning must be informed by true data inputs and analysis. AI and machine learning is changing the game and companies need to rethink their critical business processes. Examples are pervasive across the value chain to how products are designed to quality issues are identified and fixed early to demand forecasts are created to how machines on the plant floor are optimized all using real-time data and AI.

A diverse and high performing team; Be a silo buster! — Technology gets all the fanfare but people and teams really make the difference. Too often, I see companies get excited about the technology but miss the importance of understanding how to best use the new capabilities to enable the workforce and/or truly solve for a customer pain point or need. Most technology implementations and innovation programs fail because too often they are implemented in silos and fail to put the customer and/or workforce at the center. At the EYNS Innovation Hub, we like to use the analogy of a SUV and the need to get all the critical capabilities in the SUV from the very start to eliminate the “silo challenge”

Courage to be first and draw the circle — Over my 30-plus years in the business, I have had the opportunity to work for and with many inspiring, bright and wonderful human beings. One of my favorite mentors, always would say don’t be afraid to start with a blank page and draw the circle, meaning create something new. He would always say too many people want to recycle old ideas and resist thinking for themselves. He would say be bold, be brave and don’t be afraid to put yourself “out there”.

A passion for making things and providing services that improve the lives of customers — As shared above, Innovation is critical to success in manufacturing, but often ideas, inventions and new technologies progress through the development cycle without really understanding the commercial and financial viability. Does a customer really want it, will they pay for it, can we produce it at a price point that meets both the customer and our objectives, and other critical questions impacting manufacturing, how will it impact our operation, where will we make it, etc. Billions of dollars are spent every year by manufacturers on R&D and Intellectual property that never make it to market or have any impact on existing products and services. It sits on the proverbial shelf. As a side note, we are finding many situations where companies are able to monetize some of their unused IP working with other companies to find new applications of their IP in non-competitive markets. The key is constantly understanding and testing with customers throughout the development and commercialization cycle, including smaller, soft launches to perfect new products and services prior to larger scaled roll-outs.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

The power of connectivity and data coming directly from products, equipment, machines, food and other consumables could radically change the way resources and energy are used. Smart products, packaging, transportation, etc. using new connectivity, sensors and software could solve our emerging energy challenges, significantly reduce the impact of greenhouse gases and help with global shortages of food, water and other life sustaining resources. The technology is capable today of making a big impact towards solving these challenges.

How can our readers further follow your work online?

They can follow me on LinkedIn, they can keep up with what’s going at the Hub here and they can keep up with our insights across the world of Advanced Manufacturing on ey.com.

Thank you so much for the time you spent doing this interview. This was very inspirational, and we wish you continued success.

About The Interviewer: David Leichner is a veteran of the Israeli high-tech industry with significant experience in the areas of cyber and security, enterprise software and communications. At Cybellum, a leading provider of Product Security Lifecycle Management, David is responsible for creating and executing the marketing strategy and managing the global marketing team that forms the foundation for Cybellum’s product and market penetration. Prior to Cybellum, David was CMO at SQream and VP Sales and Marketing at endpoint protection vendor, Cynet. David is the Chairman of the Friends of Israel and Member of the Board of Trustees of the Jerusalem Technology College. He holds a BA in Information Systems Management and an MBA in International Business from the City University of New York.