Battery giants are facing a skills gap that could block the electric highway
From Heekyong Yang
SEOUL (Reuters) – The South Korean battery giants that power many of the world’s electric vehicles are facing a skills shortage that could drag on the global race for zero-emission transportation.
The country’s top three players, who control a third of the global electric vehicle (EV) battery market, told Reuters that they are all grappling with a shortage of research and engineering specialists as demand for the technology balloons.
LG Energy Solution (LGES), SK On and Samsung SDI Co Ltd are all among the world’s six leading battery manufacturers and supply Tesla Inc, Volkswagen and Ford Motor Co.
However, they are faced with increasing demands from large automakers and cannot find enough technicians with the necessary training to further develop cutting-edge technologies such as solid-state batteries.
“While we are seeing such growth in the industry, it seems we are facing a talent shortage,” said an LGES official. “It is crucial to recruit external talent and nurture our own talents.”
This has been confirmed by its two major domestic competitors, with SK On calling the sector’s expansion “exponential”.
In fact, the global battery sector has doubled in the past five years, and South Korea is short of nearly 3,000 graduate jobs in areas such as research and design 2020, according to the latest data from the Korea Battery Industry Association last year. LGES, SK On, and Samsung SDI are hiring currently a total of around 19,000 employees.
The Korean crisis reflects a growing skill shortage in a broader global battery market that will triple to nearly $ 90 billion by 2025, according to IHS Markit forecasters.
The EU’s European Battery Alliance planning group, for example, says that “retraining” is required in the block because the battery industry will need 800,000 new workers by 2025.
Unless the global skills gap is closed, some industry experts could slow advances in batteries, which are expected to help clean up road traffic, one of the largest sources of greenhouse gas emissions.
“Demand for talent in the battery industry outweighs supply, and battery manufacturers are keen to ensure they have this small group of people who can work on this technology and not be left behind in the fast-growing market,” said Samsung securities analyst Cho Hyun-ryul .
As a sign of the pressure from skilled workers, LGES – South Korea’s No. 1 battery manufacturer in terms of volume – is planning to open a new “Battery Smart Factory Department” at the renowned Korea University in the coming spring with guaranteed jobs for graduates.
In the immediate vicinity, executives flew to the USA to lead recruiting events at schools. LGES CEO and managers traveled to Los Angeles last month while SK Innovation CEO and staff hosted an event in San Francisco on Saturday.
These companies not only compete with other established Asian players, including market leader CATL from China and the Japanese company Panasonic, but also with fast-growing US and European competitors such as the Swedish company Northvolt, which bridges the technology gap.
The skill shortage in South Korea is exacerbated by the fact that some existing employees are moving to foreign competitors who have offered better pay, according to two industry sources. Because of the sensitivity of the matter, they declined to be mentioned.
Northvolt, which Volkswagen has among its customers, previously said some of its employees were being recruited by leading battery manufacturers such as LGES and Panasonic.
“We have few people working for Northvolt from South Korea, which is obviously a very impressive country when it comes to battery manufacturing and development, with several reputable companies operating in the field,” a company spokesman said last opposite Reuters Week.
“We try to offer competitive packages to our employees – everyone who works here is, for example, a shareholder in the company,” he added, but did not provide any information about payment.
Newly graduated battery specialists in South Korea can earn up to 100 million won ($ 85,000) a year, and those without that skill level average around 80 million won after several years of experience, according to two sources at major South Korean battery companies.
The average annual salary in South Korea in 2019 was 37.4 million won, according to the tax authority.
“WIN FOR AMERICAN CARS”
The Korean sector has also been embroiled in internal disputes, with LGES and SK Innovation, which SK On wholly owns, embroiled in a two-year battle over technology, trade secrets and recruitment until April this year when they settled their differences.
As a sign of the global importance of the two conglomerates, US President Joe Biden – who has given the promotion of electric vehicles top priority – described the agreement as “a win for American workers and the American auto industry”.
“We need a strong, diversified and resilient supply chain for EV batteries in the US,” he added.
Despite the growing skill gap, global demand for their products has accelerated battery manufacturers’ expansion plans.
LGES expects its production capacity to reach 155 gigawatt hours (GWh) of batteries by the end of this year and plans to increase that to 430 GWh by 2025, which could power about 7.2 million electric vehicles.
SK Innovation aims to more than quintuple its annual production capacity to 220 GWh by 2025 and last week announced a plan to invest 10.2 trillion won with Ford to build three battery plants in the US.
Richard Kim, senior analyst at IHS Markit, said the skill gap is likely to be an issue in the years to come.
“The labor shortage in the battery industry is already a global problem and the reality is that labor supply and demand are unbalanced as many companies begin to expand their capacity,” he added.
($ 1 = 1,184,4000 won)
(Reporting by Heekyong Yang; Editing by Jack Kim and Pravin Char)