Wages Are Getting Too High in Europe’s Eastern Workshop

When the Baumruk brothers started making simple machinery parts in their garage after the Communist regime collapsed in Czechoslovakia, they could rely on one crucial ingredient: cheap labor. Their employees were willing to do manual work for a fraction of the salaries Germans were making across the border.

Almost three decades later, the eponymous company is unrecognizable. The halls of the factory near Plzen are decked out with state-of-the-art machines from Japan that press metal sheets and cut pipes for such equipment makers as Deere & Co. And they’re operated by highly skilled engineers—who make more than the nation’s average pay.