Dieter Haap makes no bones about why W.E.T. Auto Systems, a German car parts maker, mothballed its Hungarian factory and moved production of car seats to a new plant in western Ukraine. “Hungary became too expensive,” says Mr Haap, the company’s chief financial officer. “The Hungarian production costs were seven times higher than Ukraine. We have very labour-intensive production, and as auto suppliers we are under very severe cost pressures.”

That is the logic driving many companies to locate in western Ukraine, where the border to the European Union is close and the labour costs are a fraction of those even in new EU member states such as Poland and Slovakia, which until recently had been seen as the cheap labour reservoir for the rest of the union. But with salaries increasing at double-digit rates in central Europe, and local currencies gaining strength against the euro, investors are looking even further east to save money.