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5 days ago
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The Missing Engineers
Green | The Big Take The world's need for power is outstripping the workforce that can build it. Aging populations and anti-immigration rhetoric aren't helping. By , Olivia Rudgard and Josh Saul Swedish battery startup Northvolt AB's bankruptcy filing was preceded by a number of debilitating events: failing to fulfill its contracts with customers; pleas to investors for more cash; ghosting its creditors. But its downfall began with a problem many companies are facing today. There was a severe, years-long struggle to find enough workers with the right skills. Peter Breuer, who oversaw new factory planning at Northvolt until 2023, says that the startup's ambitions grew faster than its workforce. 'That contributed to its failure,' says Breuer, who is now chief of staff at Peak Energy, another battery startup. Northvolt wanted to be Europe's first homegrown lithium-ion battery giant, raising more than $13 billion. And for a while, it seemed like it might succeed. As recently as late 2023, the company was planning to go public with a market valuation of more than $20 billion. The fall came less than a year later. Northvolt failed to make enough batteries, which led to BMW canceling a contract worth €2 billion ($2.3 billion). When investors didn't step in, the company filed for bankruptcy in the US in November 2024 and in Sweden in March of this year. Many of these facilities needed staff with sophisticated knowhow to use complex, high-risk production lines typically bought from China and South Korea. Europe's aging workforce couldn't provide them, and bringing in enough experienced workers from battery giants in Asia proved to be a challenge the company couldn't overcome. 'The Northvolt fiasco is a classic example of a great idea in concept, but it falls over on the availability of labor,' said Bas Sudmeijer, managing director at Boston Consulting Group and part of its climate and sustainability practice. Northvolt declined to comment. A shortage of skilled workers, especially engineers, is a growing problem in developed countries. How do you get more labor? 'You either birth them or you import them,' says Zeke Hernandez, professor at the Wharton School of the University of Pennsylvania. 'But in an environment of declining birth rates, increasing retirements and now a restrictive immigration regime, shortages become quite severe.' The US is already unable to fill about a third of its more than 400,000 new engineer roles created each year. The UK will see 20% of its engineers retire by 2030 — leaving a shortfall of 1 million jobs. Japan will see a deficit of 700,000 in that period. These can have big impacts on the economy. In Britain, the shortage of engineers could wipe 5% from its gross domestic product, according to the think tank Stonehaven. In the US, the lack of skilled workers will hold back President Donald Trump's attempts to increase manufacturing, even if the tariff regime stabilizes and businesses get ready to invest. Trump's attacks on US universities' international students, who tend to study engineering in a greater proportion than domestic students, will likely further sap the supply of skilled workers. When it doesn't bankrupt a company or halt a project, skilled worker shortages lead to higher costs and longer timelines to build much-needed infrastructure, such as electricity grids. This is a problem for the US and Europe, which are seeing a surge in demand for power thanks to electric cars, heat pumps and massive data centers. The US utility Xcel Energy Inc. estimates its labor costs have risen 50% in the past five years, outpacing inflation. There's also a growing urgency to electrify because it's a major strategy in fighting climate change. The world recorded its hottest year in 2024 and, on the current trajectory, it's only years away from blowing past the climate targets set under the Paris Agreement. The quickest way to get back on track is to electrify as much of the global energy system as possible while simultaneously decarbonizing electricity. The severe shortage of skilled workers is slowing progress towards electrifying everything. Some data center builders in the US are delaying new work, while others are having to plan projects two years in advance instead of six months. Utilities in the UK are struggling to keep up with customer demand for solar panels and EV chargers, while German heat pump customers are having to wait twice as long as French ones. The problem is expected to get worse. 'The demand for future engineers far outstrips the supply,' says Steve Lefton, executive chairman of engineering firm Kimley-Horn, which designs electrical infrastructure. 'The workforce shortage has the potential to be an existential threat to our industry.' Electrification is a more recent vocation than one might think. It was tinkerers, hobbyists and inventors who built the first electric grid in the late 19th century. There was little formal training and people mostly learned on the job. Among those first grids was the one that Thomas Edison built in New York City in 1882 with the help of people receiving workmen's wages whom he called ' muckers.' The grid powered light bulbs fueled by a coal-fired generator. During the 1950s and 1960s, the US and Europe saw rapid growth in industrialization and the size of the population, which also meant rising demand for electricity and a skilled workforce. It's the kind of trajectory that countries like India and China are experiencing in the 21st century. India doesn't have a shortage of engineers, but its troubles are more to do with the quality of education. Technology and regulations for the sector are changing very fast. 'We don't put them on the job on day one,' says Jai Prakash Shivahare, managing director of Gujarat Urja Vikas Nigam Ltd., a state-run utility. 'They undertake training for 45 days in the office and on the ground.' In China, grid operators are in the enviable position of choosing among a growing horde of young engineers. Many of those who lost jobs in the tech industry in the past few years are suddenly keen for secure employment at state-owned utilities, known as 'iron rice bowls.' Even if the jobs aren't flashy or high-paying, they're secure and offer strong benefits. Manufacturing Jobs are on the Rise in India and China Share of people employed in mining and quarrying, manufacturing, construction and public utilities State Grid Corp. of China, which distributes power across more than 80% of the country, received about 406,000 applications during its 2024 recruitment efforts that ultimately ended with about 26,000 hires, according to financial news provider China's utilities are also benefiting from a decades-long push in science education. The number of engineers in the nation more than tripled from 2000 to 2020 to 17.7 million, according to the State Council, and many are young. Engineers under the age of 30 account for 44% of the total pool, compared with 20% in the US, according to data compiled by Kaiyuan Securities. While Asia was booming, electricity demand in the US and Europe remained largely flat or even declined alongside deindustrialization over the past three decades. That saw the industry shed jobs, as people moved to services roles instead. That's starting to change as more and more economies — including rich ones — are getting electrified, creating a boom for those industries. But they can only be realized if they can find the workers. The skilled workforce needed for electrification is wide ranging. Today it's not just power-systems engineers and battery scientists with advanced degrees; it's also concrete pourers and electricians. These workers are key to not just manufacturing, but also to building housing and other kinds of desperately needed infrastructure. The shortage is more severe for engineering roles, which typically need years of study to understand advanced physics, industrial design and complex systems. But ramping up the domestic supply for most types of skilled roles is proving difficult. Attempts across Western economies to try to boost birth rates have shown little success. 'Given the demographic reality, immigration is the most viable solution to the shortage of workers, both in the short term and in the long run,' says Hernandez of Wharton School of Business. That has been one route that electrification industries have taken. Data shows that immigrants make up big portions of green jobs, from 8% of renewable energy workers in Spain to 26% in Australia, according to a report from the Migration Policy Institute (MPI). But the politics around immigration in rich countries has become toxic. 'Companies aren't talking about immigration policy now,' says Julia Gelatt, associate director at MPI. 'They are running away from the topic.' This problem shows up in a more acute way in the UK, which has rapidly shed its industrial past and where many people voted to exit the European Union primarily to slow down legal migration. Today, less than 10% of Britain's economic output comes from manufacturing. But the net zero emissions economy grew at three times the rate of the country's economy. That's why Prime Minister Keir Starmer now sees expanding green jobs as a central part of desperately needed faster economic growth, and that means developing a large portion of the supply chain on the British Isles. Spending Rises Across Regions for Electrification Industries Energy infrastructure investments, in billions of real 2023 dollars Indian conglomerate Tata Group, under a newly formed company called Agratas, is building an electric-vehicle battery plant in Somerset in southwest England. The batteries will power Tata-owned Jaguar and Land Rover cars and it will mean more than 4,000 new jobs. A second plant is being built by the Nissan Motor Co.-backed joint venture AESC in Sunderland in northeast England. Both facilities are expected to begin production in the early 2030s. Colin Herron, professor of practice at Newcastle University who is developing training for battery workers to staff these factories, says it's not at all clear where the employees will come from. 'Somerset is full of farmers,' says Herron. 'They haven't a clue what the automotive industry is like.' But with anti-immigration campaigns winning in elections, companies are being forced to get creative. One idea is to poach workers from other industries. Jonty Deeley-Williamson, head of learning at the UK Battery Industrialisation Centre (UKBIC), used to make croissants for a living. The battery-making process isn't all that different, he says. 'The machinery [to make pastry] is very similar.' UKBIC provides space for universities and companies to test their battery innovation. It's also a training ground to help workers new to the battery industry. Its staff of about 150 includes many who have switched over from food and drug manufacturing. They are familiar with the machinery and used to working on a factory floor. It's a learning curve, but less steep than you might think, says Deeley-Williamson. 'Instead of using flour or pharmaceuticals, you are now looking at handling a slightly more hazardous substance.' But the need for staff is so great that it has led to a rapid increase in training academies — many funded directly by companies — that are readying a new generation of workers for electricity-related jobs. A shortage of skilled people is the main thing holding up UK utility Octopus's ambitions to dominate the country's growing markets for solar panels, heat pumps and EV chargers, says John Szymik, chief executive officer of Octopus Energy Services. The company has long waiting lists of customers wanting low-carbon tech. Octopus needs 4,000 installers by 2030. It's hard to recruit engineers from abroad, so the company must train them itself. So far, only 36 have started the two-year course that will teach them to install those low-carbon devices at homes and businesses. It's not the only company seeking more skilled workers. The British government has launched a series of taxpayer-funded programs with the goal of training 18,000 installers as soon as the middle of next year. 'It's not that we don't have the technology or the hardware or solutions,' he says. 'It's just how quickly we can physically get people bought into the business [and] trained up.' In a small classroom wedged inside a cavernous warehouse in northern England's Rotherham, 11 Octopus apprentices each examine a radiator. The white, suitcase-sized, rectangular object is made of steel, and the piping inside it will transport hot water from an electrically powered heat pump, which will bring a room to a comfortable temperature without a fuel-burning furnace. The apprentices are learning how to hang one on the wall. Octopus Energy apprentices listen to a briefing at the company's training facility in Rotherham. The UK has more than 140,000 skilled workers qualified to install and maintain gas boilers and stoves, but fewer than 10,000 active heat pump installers. Photographer: Lorna MacKay/Bloomberg Apprentices hang radiators during a training exercise. Many gas installers will retire before they make the switch to heat pumps — half of those currently working are over the age of 55 — meaning new people need to be trained. Photographer: Lorna MacKay/Bloomberg Each apprentice has been given an array of shiny copper fixings, a toolbox and their own practice area the size of a restaurant booth. They learned the theory in a PowerPoint presentation in the morning, and now it's time to put it into practice. This group is in their fourth month of training; along with classroom time, they also will get on-the-job experience. 'It's not that we don't have the technology or the hardware or just how quickly we can physically get people bought into the business [and] trained up.' One of the apprentices, Ed Connor, 46, spent 26 years in the British Army, retiring as a sergeant managing training for weapons handling and battlefield skills. Connor's neighbor, an Octopus employee, told him that the company was recruiting for its low-carbon apprenticeship. The students range from teenagers to career-changers like Connor. Being part of a national effort to install heat pumps has offered Connor a new purpose. 'A lot of ex-servicemen do struggle to adjust,' says Connor. 'I've kind of embraced this Octopus identity,' he says, pointing to the bright pink Octopus logo on his shirt. Student Gracie Reed, 20, one of two women in the group, comes from a family well-versed in the practical trades – her grandfather spent his career working with gas boilers. Now she's pursuing the modern version of that same path. 'Hopefully, I can follow in his footsteps.' Photographer: Lorna MacKay/Bloomberg 'I'm passionate about the environment,' says Paul Phillips, 34, a former prison physical education instructor. He previously began training to install gas appliances but switched to the Octopus course after reading about it online. 'When you're installing the heat pump, you know you're doing a good cause, and it's really nice because at the end of it, you can see they're really grateful for what you've done.' Photographer: Lorna MacKay/Bloomberg Some companies are targeting the young. French power-distribution company Enedis has launched technology classes in 120 high schools and 40 universities. Those who are chosen for its training programs are offered 18-week internships. Daikin Industries Ltd, a gigantic heat-pump maker based in Japan, has doubled the number of training centers it operates across Europe in the last three years. Engineers Are in Short Supply in the US Alison Tripp, who leads recruiting at DPR Construction Inc., worries about the shortage of construction workers needed to build data centers. To build up the company's applicant pipeline, she sends recruiters to schools around the US so they can talk up the benefits of being a foreman, concrete worker or — especially right now — an electrician. 'The field positions are really hard,' she says. 'There's a labor shortage across the country. Everybody's talking about it. It keeps me up at night.' DPR Construction builds crucial infrastructure to support the AI boom and employs 11,000 across the world. But often the new power plants and massive data centers it's building are in remote locations, and the local workforces aren't sufficient. In those instances, DPR, like an increasing number of companies, will dispatch 'travelers,' workers who rent nearby hotel rooms or drive their own recreational vehicles (RVs) to live in near the worksite. Many utilities that build power lines for data centers also are having to pay more for skilled workers and then recoup those costs from ratepayers. Dominion Energy Inc., the utility that powers Virginia's Data Center Alley, asked regulators for permission to increase residential bills by about $10 per month over the next two years in part because of the high cost of labor. Clients want projects started and completed quickly but sometimes there just aren't enough workers available, says Joe Sczurko, the US region president at global engineering firm WSP, which designs solar, wind and gas power plants. In those cases, WSP has to work out a more realistic — and longer — deadline with the client. 'In an environment of declining birth rates, increasing retirements and now a restrictive immigration regime, shortages become quite severe.' Another solution is to employ refugees, some of whom have the right technical skills but may lack in language skills or have precarious housing situations. German utility SE, which has found it hard to recruit software engineers, says it attracts refugees for these roles by offering free language courses and legal support to secure stable accommodation. Smaller things also can make a difference. Perception can hold back candidates. Some people in the UK see engineering as dirty, a job where grease-laden mechanics toil in garages or on chaotic factory floors. Office jobs and university education have been prioritized over apprenticeships and trades, according to UKBIC's Deeley-Williamson. 'There does seem to be this bias against manual labor jobs,' he says. His pitch to recruits is that battery clean rooms are tidier than the most sensitive areas of hospitals. 'They're sometimes cleaner than operating theatres.' GE Vernova Inc. received very few female applicants for heavy duty plant engineering jobs at its electrical-equipment factory in Stafford, UK. Aiming to increase the applicant pool, the company started deleting the word 'heavy' in its marketing materials and added photos of women doing the job. As a result, a larger proportion of women started applying for hundreds of new jobs at the Stafford factory to produce transformers, a device necessary for the functioning of the grid. Highlighting the do-gooder factor of clean energy can also help. Samantha Betts, 37, used to work as a hairdresser in London. But a few years ago she began taking software classes, eventually receiving a job offer from the green British utility Ovo Energy Ltd. 'It aligns with my beliefs and things that I'm passionate about,' says Betts. She joined the startup two years ago, and now works on Ovo's app for customers. Her hairdressing skills were surprisingly transferable. 'You think of a software engineer, you think of the guy in the basement, tapping away,' says Betts. But she's hoping that being used to chatting with people and making them at ease sets her on a path to becoming a manager. 'I feel like I still use the same skills every day.' These domestic attempts are small but necessary. Because even if political opposition to immigration policies could be overcome, it's not easy to recruit people from abroad given electrification industries are on the upswing everywhere. Steve Doyle, chief executive officer of EVera Recruitment, specializes in UK-based electric car and battery companies. One of his tasks was to hire battery cell designers, mostly from Japan, South Korea and China, to bring to Britishvolt, the UK's answer to Northvolt. His team found 500 people in the world who could fill the jobs. They managed to hire a 'grand total of zero,' he says. Britishvolt filed for bankruptcy in 2023. Assists: Julia Janicki, Eva Brendel, Lou Del Bello, Francois de Beaupuy and Dan Murtaugh Editors: Emily Biuso, Aaron Rutkoff and Tim Quinson Design & Photo Editors: Somnath Bhatt and Jody Megson More On Bloomberg
Bloomberg
10-04-2025
- Business
- Bloomberg
Green Energy Boom Driven by Trade War Supply Shift
Global supply chains have reconfigured since the 2018-19 trade war, leading to a surge in renewable-energy demand in countries such as Vietnam, Indonesia and Malaysia as Nike and Samsung set up operations. This trend, coupled with population growth and the proliferation of AI-driven data centers, is projected to triple the demand for power in the next five years, according to Gavin Adda, CEO of Peak Energy. The subsidiary of Stonepeak, an infrastructure investment firm which manages more than $70 billion in assets, expects a big chunk of this energy demand will be met with renewable sources. Adda also sees Asian countries deregulating energy markets, opening up avenues for investments in solar and wind. He joins John Lee and Katia Dmitrieva on the Asia Centric podcast.
