Issue link: https://read.dmtmag.com/i/1483036
68 tobaccoasia Issue 6, 2022 November / December Credit for all: Hertz Flavors "That building will still stand in 100 years and perhaps even will become a much-visited future tourist attraction, who knows," Pages joked, tongue in cheek. "But seriously… our intention was to build something that not only is a representation of our company but in the same manner is testimony to the excel- lence of German engineering. We wanted to create a German factory in the heart of Indonesia." Pages cited the historically strong economic ties between German companies and Indonesia in terms of knowledge transfer and investment. "We are proud to be here." Advantages for all sides The Hertz facility is going to provide plenty of local jobs, too. While Pages admitted that presently local employees number only around 20, it's going to reach at least 110 by the end of 2022. Be- ing in Indonesia will help solve logistical headaches for Hertz Flavors as well. Re- gional customers always had to cope with lead times of at least 4-6 weeks, while shipping to Asia from Germany could easily take up to three months. "There're lots of benefits with the new factory, as manufacturers in Indone- sia and the region can now cut down on that lengthy lead time," Pages explained. "Shipping will be much faster and less costly." Another advantage is savings on export and import duties. "We are going to source most raw materials right here in Indonesia, which we then will no longer have to export to Germany for process- ing. At the same time, ready flavor batch- es won't have to be back-imported into Indonesia." Hedging against stagnant EU and US markets Showcasing German engineering. Foster- ing closer economic ties. Providing local jobs. Improving lead and shipping times. Saving cost. These are all good and de- cent goals to achieve. But Hertz Flavors also aimed at strategic aspects with its de- cision to move into Indonesia. In the wake of the rise of vaping, the company over a decade ago estab- lished its Flavoriq offshoot in Dubai, which exclusively serves the e-juice mar- ket. And now the Indonesian facility not only expands the firm's global footprint geographically, but it also hedges the company against an increasingly stagnant and sluggish European market by shifting a sizeable proportion of the business into the APAC growth region. What about North America? While the firm, currently working with local agents, "might establish some sort of a representative office there in the future," Pages nevertheless pointed out that North America is basically facing the same downturn as Europe. "And if the US is going ahead with its plans to ban menthol flavors as well as flavored cigars, there is going to be a big drop in business for flavor companies." The factory is also fully equipped with administrative offices and meeting rooms. A production hall, depicted here still bare of machinery. One significant detail are the large windows, which help create a more pleasant working environment for production staff. Credit for all: Hertz Flavors