A group of Milwaukee-area metal plating companies has found an unorthodox way to fight employee health care insurance cost increases. The owners of Artistic Plating, Chrome Tech of Wisconsin Inc., Elite Finishing LLC and Reliable Plating Works Inc. formed a holding company in late 2000, named Brilliance LLC. By grouping together, the members of Brilliance are able to purchase insurance – both health care and worker’s compensation – commodities, transportation and lease equipment at rates that are usually offered to much larger firms.
By standing together, the companies have limited their health insurance cost increase to just 5 percent since the group was formed more than five years ago.
They’ve also been able to cut waste removal costs and attract better rates from financial institutions.
Forming Brilliance has given its four founding companies big savings, which helped them weather the recession after 9-11.
"All of the savings fall to the bottom line," said Alan Henry, owner of Franklin-based Chrome Tech. "It became even more important when we were down, because we weren’t having to generate more sales (to make up)."
The idea to form Brilliance came in the late 1990s when there was a consolidation trend in the metal plating industry, said Jaime Maliszewski, president of both Reliable Plating Works and Elite Finishing. The four members of Brilliance each were approached by a large corporation that wanted to purchase them.
Each owner rejected the offer, but found some of the benefits of consolidation to be appealing.
"We had the idea – why not create a holding company to buy services and insurance, commodities in bulk, handle marketing, buy training and lease equipment?" Maliszewski said. "We would all buy an interest and pay for what we use, but still retain our companies."
With the holding company, the firms quickly reaped savings on their insurance cots.
"Reliable (Plating Works) saved $20,000 in the first year," Maliszewski said. "We kept the money in Brilliance as seed money."
By grouping themselves together, the members of Brilliance have made themselves more attractive to insurers and suppliers, Maliszewski said.
Brokers and providers of worker’s compensation insurance believe Brilliance is a safer bet because it represents more employees, Henry and Maliszewski said. Health insurance providers are more interested in Brilliance because it represents a larger pool of employees and ultimately more people and dollars.
"They’ve started to call us and ask if they can bid," Henry said. "They can buy a bigger chunk of business easier (than going after each company separately)."
The skills of Terry Collins, owner of Milwaukee-based Artistic Plating and a board member, have been critical to the savings in insurance. Several board members said Collins is effective at looking at insurance estimates, risks and costs, and is skilled at negotiating with insurance brokers and providers.
"He knows enough about that business, and he’s able to negotiate in that way," Maliszewski said. "He’s helped to make things better."
Brilliance budgets its annual premium payments as if it was 100-percent maxed out in the previous year, and there has almost always been carry-over money. At the end of the year, the group’s board of directors meets, and each company is allocated a refund based on the amount of coverage they used. Some have given employees a month of free premiums and others have used the money for business expenses.
A top-level manager or owner of each company sits on the Brilliance board. The group meets about once a month.
By being in better control of their health insurance costs, the company owners are better able to talk to their employees about further controlling costs by encouraging consumerism, they said.
"If we see a reduction, they see it too," Maliszewski said. "You can see over the years how the usage changes, in emergency vs. urgent care and the use of generic drugs."
"They start asking questions," Henry said.
Brilliance has seen some of its greatest savings in waste hauling, which has fallen to about one-third of its original cost.
Similarly, the group has also been able to leverage its larger numbers for savings on deliveries.
"The suppliers are seeing a benefit, because one guy can make the milk run to four different spots (in one area)," Henry said.
The company has also saved money on employee training, especially for common things such as OSHA-mandated safety programs, because it can assemble a large number of employees in one place at one time.
Brilliance has now grown large enough to support its first employee. The combined company’s board recently hired a part-time employee to handle paperwork, claims processing and other functions the board had been doing.
The members of Brilliance also are considering the notions of the combined company making its own products and making acquisitions of other companies, Maliszewski said.
In late 2004, Brilliance accepted a fifth company, Hardwood Line, a Chicago-based metal finishing manufacturer and equipment supplier. The savings Brilliance has achieved in health case costs made joining the group attractive, said Anton Lazaro, president of Hardwood.
The group is hoping to attract more members in the future, but is being careful of which companies they will invite to join, both Maliszewsi and Henry said. Brilliance is currently negotiating with a plastic molder, a furniture manufacturer and a construction company to potentially join the group.
"We don’t want another company coming in just because," Henry said. "It’s better if all of the companies are strong."
Brilliance LLC Members
- Chrome Tech of Wisconsin Inc. 10020 S. 54th St., Franklin
- Reliable Plating Works Inc. 5230 S. 13th St., Milwaukee
- Elite Finishing LLC 3270 S. 3rd St., Milwaukee
- Artistic Plating 405 W. Cherry St., Milwaukee
- Hardwood Line 4045 N. Elston Ave., Chicago
