In most lower-middle-market manufacturing deals the workforce stays, because the workforce is a large part of what the buyer is purchasing. Terms and benefits are negotiated and can be addressed in the agreement.
More detail
Buyers acquiring a manufacturer in a tight labor market are generally buying trained people they cannot easily replace, so wholesale changes are rare and usually confined to duplicated administrative roles when a strategic buyer already has that function. Sellers who care about this outcome can negotiate for it: commitments on retention periods, benefit continuity, or comparable compensation can be written into the purchase agreement, and many sellers make it an explicit criterion when choosing among offers. In an asset sale, employees are technically terminated and rehired by the buying entity, which affects accrued benefits and requires planning, and that mechanical detail is worth understanding before it is explained to the workforce.