By Heekyong Yan

SEOUL (Reuters), – A skills gap is threatening the race for zero-emission transport.

Three of the country’s major players control a third global electric vehicle (EV battery) market. They told Reuters that they are all struggling with a lack of engineering and research specialists due to the high demand.

LG Energy Solution (LGES), SK On (KS:) SDI Co Ltd, all of which are in the top six global battery producers, supply Ford Motor (NYSE –:) Co and Volkswagen (DE:) among others.

They are however facing increasing demands from automakers.

LGES officials stated that although there is a lot of growth in the sector, we seem to be facing talent shortages. It is important to both recruit and nurture external talent.

This statement was echoed equally by the two major domestic competitors, with SK On describing this sector’s growth as “exponential”.

The global battery industry has increased in size by almost twofold over the last five years. South Korea, however, is currently short nearly 3,000 graduates in research and design according to data from Korea Battery Industry Association. This information was updated in late 2020. LGES, SK On, and Samsung SDI have a combined total of approximately 19,000 employees.

According to IHS Markit, the Korean shortage is a sign of a larger global talent crisis. The market will double in size by 2025 to nearly $90 billion, IHS Markit predicts.

According to the EU’s European Battery Alliance planning committee, “re-/upskilling is required in the bloc” because 800,000 workers are needed for its battery industry by 2025.

Some experts in the industry believe that if the gap in global skills isn’t closed, it will slow down the progress of batteries. These are used to reduce greenhouse gas emissions from road transport.

Cho Hyun Ryul from Samsung Securities said that the demand for talent in the industry is greater than supply. Therefore, battery companies are keen to make sure they have the right people in place who can help them in this fast-growing market.

“COMPETITIVE PAKAGES”

LGES, South Korea’s largest battery producer by volume, has announced plans to create a new department for “battery-smart factories” at Korea University. The program will offer graduates guaranteed employment and will be a signal of the skills shortage.

In the immediate future, executive have been traveling to the United States in order to attend schools and lead recruitment events. LGES CEO, his staff and managers traveled to Los Angeles last month. SK Innovation CEO hosted an event in San Francisco this Saturday.

They are competing not only with established Asian companies, such as market leader CATL (China) and Japan’s Panasonic(OTC:), but also fast-growing European and U.S. rivals like Northvolt which bridge the technological gap.

Two industry sources who are familiar with the situation say that South Korea has a talent shortage. Some employees have moved to countries offering better wages. Due to the sensitive nature of the issue, they declined to identify themselves.

Northvolt counts Volkswagen among its clients. It has stated previously that it had hired some employees from the top battery manufacturers, such as LGES or Panasonic.

According to Reuters, a spokesperson said that Northvolt does not employ many South Koreans who work for it.

“We try to offer competitive packages to our employees – everyone working here is a shareholder in the company for instance,” he added, though did not specify pay details.

South Korean battery specialists can expect to earn up to 100 million won (or $85,000 annually) after being awarded a doctorate. However, those with less experience average 80 million won. These figures are based on two sources who work for major South Korean batteries firms.

The average South Korean salary for 2019 was 37.4 Million Won, according to tax agency data.

‘WIN for AMERICAN AUTOS’

LGES, SK Innovation and SK On were involved in a conflict in the Korean sector. This dispute lasted for over two years and was resolved in April.

The settlement was described by Joe Biden, the U.S. president, as a “win for American workers” and the American automobile industry.

He said, “We require a U.S.-based strong, diverse and resilient electric vehicle battery supply chain.”

Despite the increasing skills gap, global demand has fueled the expansion of battery manufacturers.

LGES projects that the company’s production capacity will be 155 gigawatts of battery power by year end. It plans to increase it to 430 GWh in 2020, which would allow for about 7.2 millions EVs to be powered.

SK Innovation aims at increasing its annual production to more than 5 times to 220 GWh per year by 2025. Last week Ford announced a plan to invest 10.2 Trillion won in three US battery plants.

Richard Kim (principal analyst at IHS Markit) said that the skills gap would be an issue for many years.

“The labor shortage in the battery sector has been a worldwide problem, and it is now that there has been an unbalanced supply and demand for manpower as companies increase their capacity,” he said.

(1184.4000 Won = $11)