(FORTUNE Magazine) – Just days after the U.S. trade deficit hit a record high in March, Leggett & Platt announced plans for a new factory in China. A typical story of U.S. manufacturing moving overseas, right? Wrong--because there's not much typical about Leggett & Platt (No. 404), the FORTUNE 500's only furniture company.

You won't find the Leggett brand in stores, but it is the world's biggest provider of internal parts for familiar brands such as La-Z-Boy recliners and Serta mattresses. Leggett started life after its founders patented the bedspring in 1885 in Carthage, Mo., where it's still headquartered. It diversified after it went public in 1967, and in the decades since, its size-- $5.3 billion in sales in 2005--and soup-to-nuts integration have offered furniture makers cheap outsourcing close to home.

So while 70% of wood furniture bought in the U.S. is made overseas, most upholstered furniture (Leggett's specialty) is still built here. When customers do move overseas, Leggett follows. With the new factory in China (its 12th there), Leggett intends to continue beating the Chinese at their own game--selling parts to U.S. companies assembling goods in China. "As long as we have a level playing field on the price of raw materials," says CEO Felix Wright, "we don't have any problems competing with any Asian companies."

Wright, 70, worked at Leggett for 40 years under one of the founder's grandsons before taking over in 1999. That sounds Mayberry-like, but don't be fooled--Leggett has averaged 15% earnings growth since 1967 and features the longest-running dividend increase among the 500: 34 years. "We've bred a culture that is about who we are, what we do, and why we're so good," says CFO Matt Flanigan, a Carthage native. "That's what you do in this neighborhood." Even if that neighborhood moves to China.