I created an application launcher for Eclipse, gave it an icon and name "Eclipse Luna" but unlike application launchers like "Google Chrome" and "Chromium Web Browser" the name is not broken into two lines. Please see the screenshot (I am not able to embed it here due to "It was not possible to determine the dimensions of the image." problem)
http://s11.postimg.org/6wbi8nsvj/snapshot1.png

What can I do to make the longer icon name word-wrap automatically?

What type of desktop layout are you using?

I am not sure if I understand what desktop layout is. Could you please guide me little bit here?

There's the desktop which is more or less empty (cashew) and you add plasmoids (eg. folder view, a clock - or buttons to single locations) to it and the "icon view" mode where the entire desktop shows the contents of a specific directory (usually "~/Desktop")

If the desktop/plasmoids are NOT locked, does hovering the eclipse icon show some sort or manipulation (size, position, rotation, ..) toolbar next to it?

The Desktop Layout in use can be checked by right clicking on the desktop, selecting "Settings" and checking the value of "Layout" on the "View" tab.

Ok thanks for hint. I have the default desktop layout.

Okay, in this case please ensure widgets are unlocked. If you then hover over the Eclipse icon a controller should pop out on the right side - you can use this to resize the Eclipse icon and make it wider/taller which should allow the icon name to be displayed properly.