Drive out of Budapest on the main highway stretching east to west across Hungary.
Leave behind the tourists and the castles and monuments of Hungary's past on Buda Hill and you'll find both the present and the future. Supermarkets like U.K.-import Tesco plc compete for business with the old communist-era shops. Swedish furniture giant Ikea Systems BV is set to open its third store in the next few months.
And on the road, lines of trucks travel the highway in a steady stream, shipping parts, supplies and finished goods in both directions.
This is the main artery feeding Hungary's growth and its activities are echoed on roads throughout central Europe, where one-time Communist bloc nations have evolved into manufacturing hubs for Western European, North American and Japanese brand names. The growth is set to spread further east into Russia and the Ukraine.
Growth that began slowly after the fall of Communism in 1989 accelerated when central European countries like Hungary, Poland, Slovakia and the Czech Republic joined the European Union in 2004. And business is expected to continue its expansion for at least another decade.
``Things are changing faster than can be kept up with sometimes,'' said Tomasz Schabowski, mold-making operations manager for Wentworth Technologies Co. Ltd. in Poniatowa, Poland. A mold maker and plastics processor based in Burlington, Ontario, Wentworth launched production in Poland 10 years ago.
Firms not yet in central and Eastern Europe are looking to go there, while those already there are expanding.
The auto industry has boosted production by 41 percent in one year just in the Czech Republic, from 602,000 cars in 2005 to 851,000 cars in 2006, and that is expected to climb to nearly 1 million cars by 2011.
Thermoplastics demand in Hungary alone is expected to rise by 5.6 percent, on average, each year between 2006 and 2011, according to consulting firm Eastern and Central European Business Development Ltd. Other countries will see even higher growth rates - including 7 percent in Poland and nearly 11 percent in the Ukraine, said Budapest-based ECEBD.
``I get calls all day,'' ECEBD manager Tamas Kovacs said in an interview at his Budapest office. ``[Companies] need to know who's here, who's doing what, who's making what.''
ECEBD researches plastics buyers, sellers and users throughout the region. It tracks the major resin sellers, as well as the resin use of major players in countries such as Russia and the Czech Republic, and injection molders in Macedonia and Croatia.
``To do this business, you have to invest in knowing languages that may only be spoken by 2 [million] or 3 million people,'' Kovacs said.
But no one should be surprised by so much business growth in the region, said Milan Sindelar, sales and marketing manager for auto supplier Cadence Innovation LLC's Czech and Hungarian operations. Central and Eastern Europe were the crossroads of business for centuries before World War II, Sindelar said. It was the 40 years of communist rule that were the exception in their history, not today's business rebirth, he noted.
As political conditions steadied in the 1990s, companies slowly began investing in production in central Europe, drawn by the prospect of lower costs and new markets.
When the EU expanded into central Europe, eliminating trade barriers, it brought an increased shift in business from Western Europe by companies that included carmakers Volkswagen, Toyota and General Motors; home appliance maker Electrolux AB of Stockholm, Sweden; and consumer electronics firm Royal Philips Electronics NV of Amsterdam, Netherlands.
And where original equipment makers go, suppliers follow.
Nypro Inc. came to Hungary to work with one of its biggest customers, cell phone maker Nokia Oyj.
The Clinton Mass.-based firm teamed up with an injection molder in Tata, Hungary, that made consumer plastics and launched a joint venture. Nypro then invested heavily in training and equipment to bring its capabilities in Hungary to the same level of its plants anywhere.
``We had to convert the mind-set within six months,'' said Balazs Kalmar, Nypro Hungary's general manager in Nagyigmand. ``We had a high level of expectations and everything had to follow that.''
Expansions in the auto industry prompted auto supplier Johnson Controls Inc. of Milwaukee to announce plans recently for a 170-employee automotive business center in Bratislava, Slovakia, just to oversee human resources, information technology, purchasing and finance for its plants in the area. The office also has space for another 180 employees for potential expansions.
But all of that growth brings its own issues.
Low wages may have drawn companies first to central and Eastern Europe, but that cost advantage will not last forever, and the demand for skilled workers already is having an impact.
In eastern Hungary, where Nypro makes cell phone housings, laptop modems and plastics for consumer health-care products in Nagyigmand and Tata, and Cadence makes door panels in Esztergom for Suzuki and Fiat, the unemployment rate is zero percent, compared with a national rate of more than 8 percent.
Workers near Nagyigmand can work for Nypro or New Holland NV's farm equipment plant next door. There are automobile plants, cell phone manufacturers and electronics companies all located within a few miles.
``We have a lot of employers here, and a limited resource pool,'' Kalmar said in an interview at Nypro's Nagyigmand plant. ``If someone makes a bad part and we fire them, they have another job the next day.''
Nypro has reached across the border into Slovakia for Hungarian-fluent employees to supplement its workforce. Other employers have recruited workers from western Hungary and are beginning to tap Ukraine and beyond.
That's only part of the employment issue.
Joining the EU makes it easy for Polish, Czech or Hungarian manufacturers to ship products west, and also makes it easy for workers in those countries to travel west for jobs.
``We are here [151/2 miles] from the German border,'' said Pavel Neuman, chief executive officer of Cadence's Eastern Europe operations, based in Liberec, Czech Republic, in the rolling hills north of Prague.
``You must pay people on the level so that for them it doesn't make any sense to go and work in Germany.''
So with costs rising - and customers and consumers expecting the same quality of products regardless of where they are made - firms are faced with the same automation and technology demands as their counterparts in North America or Western Europe.
``At the beginning, the idea was that low labor costs would mean that we don't have to invest here in advanced technology,'' Neuman said. ``At this time, I tried to explain that it's wrong. If you want to remain profitable, you must use the capabilities and have modern technology combined with low labor costs to give you a higher chance to make a profit.''
Though firms have been able to create high-end, highly technical products in central Europe, they've had problems building local supplier networks for making molds or subassembling parts. Even for simple molds, local toolmakers have not adapted to the fast pace of today's marketplace.
``Up to this year, we never outsourced anything,'' Kalmar said. ``It wasn't possible.''
Cadence has developed tooling skills at its own 130-person tool shop in Liberec to create molds for its proprietary auto interior designs.
Wentworth, meanwhile, can make blow molding tools in Poland that meet global standards. But the smaller central European markets mean the bottle makers in such places as Slovakia, Hungary and Romania want to manufacture bottles in smaller volumes, with 12- to 16-cavity molds; whereas, Wentworth is focused on 48-cavity molds and higher.
That is exactly why Wentworth is watching for how quickly the bigger markets in Ukraine and Russia will open, Schabowski said. There are 141 million residents in Russia, compared with Hungary's 10 million. The company is priming its newest plant, in RzeszÃ³w, Poland, to handle demand expected from the east.
Auto suppliers like Cadence are watching the scene in St. Petersburg, Russia, where Volkswagen, Nissan and GM all plan to open assembly plants this year - joining Toyota and Ford, already in the city.
Companies without a presence in central or Eastern Europe need to take a serious look, Nypro's Kalmar said. But he recommended they find a good partner to help them navigate unfamiliar territory. The raw numbers are tempting, but it is as easy to make a bad decision in central Europe as it is anywhere.
``If somebody is only thinking about low-cost labor or markets, they're missing the real opportunities,'' said Kovacs at ECEBD.
``People expect that the markets are going to be homogeneous here, that they're going to find the same workers anywhere they go. They aren't. If they don't know where they're going, they can end up with the wrong information.''