Curbing reliance on China needs an army of workers

If Roald Dahl's stories were rewritten with industrial policy in mind, "Charlie and the Chocolate Giga-factory" would be a European bestseller. Nothing inspires childlike wonder among politicians like the manufacture of electric-vehicle batteries and other critical technology across an area equivalent to scores of soccer fields. Governments shell out subsidies by the billions to win the golden ticket of greening the grid and onshoring jobs while reducing reliance on China.

As in the original, though, the race isn't without risk. Last week saw Ford Motor Co get $9.2 billion in US government loans and Intel Corp receive a $10.9 billion German subsidy package — which on a per-job basis is getting into six-to-seven figure territory. And with more than 300 giga-factories in the pipeline, the war for talent is running hot. Amid a post-Covid worker crunch, there have been hiring and training bottlenecks such as at General Motors Co or Tesla Corp, which makes ramping up production harder — something highlighted by a recently released European auditors' report on battery policy.

The shortage of workers needed to power the green transition needs more discussion — and action — at a time when economic security is usually associated with critical raw materials and strategic investment funds like in Italy and France. The numbers are stark: Europe's battery industry is eying the creation of 800,000 jobs through 2025, and the design know-how is concentrated in the US and Asia. And that's only in batteries — solar and wind energy will likely add another 650,000 jobs over the next eight years. A Europe that wants to create some distance from Chinese suppliers will need to conjure a new workforce at a time when demographic trends are in decline and anti-immigration parties are gaining share.

One obvious answer is to train more engineers. But that will take time and effort — France, for example, pumps out 40,000 engineers a year when it needs 60,000, according to a report by think tank Le Millenaire. The real optimism is in retraining staff from existing industries, such as the manufacture of combustion-engine vehicles that are out of step with a net-zero world. Estimates of auto-industry job losses from electrification vary, but according to industry association CLEPA, half a million are at risk, with the bulk between 2030 and 2035. That suggests a reservoir of workers that could ride the energy transition rather than be washed away by it.

There are some positive examples. In northern France, a giga-factory co-founded by carmaker Stellantis NV is organising the transfer of more than 200 local staff using a new "Battery Training Center." The prospect of switching blue overalls for the white outfit needed in a clean, dry battery factory, along with a competitive wage, is attracting workers — including those from other industries like pharmaceuticals. "We are snowed under with applications," says recruiter Salima Menai, who says hiring bottlenecks are starting to ease. A somewhat similar story from March saw a Stellantis car factory in Slovakia lay off fewer people than predicted thanks to EV job transfers.

The problem is that so far reskilling has yet to really deliver at scale. A Bruegel study in January noted that the proportion of European adults participating in formal or informal training was below the European Union's aspiration of 60% in all but two countries. The urgency of politicians, think tanks and chief executives doesn't always translate well to a workforce that may not have the time, incentives or ability to retrain or reskill. Well-meaning corporate "academies" lack the experience and competence to manage education programs long-term. And regions that are economically dependent on fossil fuels may find the barriers to transition higher than others, as research on Central Europe's auto industry suggests. 

What's missing? Maybe a more targeted industrial policy that goes beyond the subsidy race. The Swedish model might be one instance, as one of the few countries that's above the target for adult learning: It offers significant financial incentives for retraining. And maybe the example of the US Inflation Reduction Act should be to attach more conditions to government freebies: A childcare provision has been tied to US chip-manufacturing funding, which could encourage more women and people from underrepresented backgrounds to enter critical industries.

If all else fails, there's always the nonfictional chocolate factory. Steve Doyle, boss of UK recruiter EVera, thinks hiring will have to get creative. He's likened specific stages of the lithium battery production line to other types of work, comparing lithium powder mixing to Nestle's production of KitKats — maybe not quite where European policymakers want taxpayers' billion-dollar subsidies to end up. But with the winds of a potential recession blowing, and with some industries like packaging already in one, golden-ticket holders will have reason to cast a wider search for workers.

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.