Watts Industrial Tyres Plc has signed an agreement with Continental AG to supply solid industrial tyres to Continental's Industrial Tyre business unit.

The tyres will be manufactured to Continental's specifications at Eu-Retec (Pvt) Ltd in Sri Lanka, which Watts took a 50 per cent stake in this year. Continental will use the Sri Lankan product to develop its presence in the US and Asia.

No financial details of the partnership, which was signed on September 30, were revealed.

Watts Industrial Tyres has been manufacturing solid industrial tyres through joint ventures in China and Sri Lanka for several years, and the Eu-Retec investment means Watts can benefit from the low production costs, while ensuring that production does not depend on one region.

Watts managing director Doug Pearson said: "We are delighted to be working with Continental and this agreement will ensure that our new Sri Lankan facility can benefit from the economies of scale that this volume will provide."

Company chairman John Thurston said Watts had transformed its business model in recent years.

"This has allowed us to cooperate with Continental in this way. Supply chain agreements between competitors are not unusual in other industries, and it is a trend that we are keen to develop," he said.