MADRID – Mercedes-Benz taps its plant in Vitoria, Spain, to build the successors to its Vito and Viano vans.

Volker Mornhinweg, head of Mercedes-Benz Vans, makes the announcement during a visit to the plant 200 miles (320 km) northeast of Madrid in Spain’s Basque country.

German parent company Daimler will invest E1 billion ($1.37 billion) in the facility for production of two new models codenamed VS20.

The auto maker says it will add 300 positions to Vitoria’s 3,138-member workforce if the plant produces at least 100,000 units over two consecutive years.

The announcement follows several months of negotiations between Mercedes-Benz Spain and the four unions representing Vitoria workers.

Workers this fall voted 1,830-967 to approve a tentative 4-year agreement including annual 2.5% raises, E100 ($137) bonus payments and 214 working days in each year.

They will receive a E250 ($342) bonus in 2015.

The auto maker says reduced labor costs and greater production flexibility were keys to the Vitoria plant winning the VS20 project.

The new products will replace the Viano multipurpose and Vito light-commercial vans.

Viano and Vito production fell to less than 55,000 units in 2009, down from 102,600 in 2008.

As demand began to slip, Mercedes initiated the first of three production cutbacks and temporary layoffs that extended into this year.