By Liz White, UT contributing editorLydney, UK-Watts Industrial Tyres plc, a major UK-based maker of industrial tyres, is to make solid tyres for Continental AG's Industrial Tyre business unit. Watts is to make the tyres to Continental specifications at its plant in Sri Lanka, called Eu-Retec (Pvt) Ltd. Continental is going to use the Sri Lankan product to develop the US and Asian markets, according to a joint statement from the partners. "This cooperation with Watts will enable us to develop our sales in important markets," said Dieter Saar of Continental, in a joint statement on the agreement. "We are delighted to be working with Continental Tyres and this agreement will ensure that our new Sri Lankan facility can benefit from the economies of scale that this volume will provide," commented Doug Pearson, managing director of Watts Industrial Tyres, in the statement. Watts has been sourcing tyres from the Sri Lankan unit for several years-as have other European tyre makers-and earlier this year the Lydney, Gloucester-based firm acquired half the equity in Eu-Retec. Watts-which also has a major rubber compounding business and a urethane-part making unit at Lydney-said it has been making solid industrial tyres via joint venture agreements in China and Sri Lanka for several years. The firm makes solid tyres using both rubber and polyurethane, as well as pneumatic tyres, together with wheels, for industrial uses. The company's investment in Eu-Retec "ensures that Watts will continue to benefit from the economic advantages" of low labour and other costs in Sri Lanka, the firm said, adding that it also ensures that production is not dependent on a single facility in one region. "