Federal debt deal affects small LI firms

John J. Molloy, chief executive of the Melville-based architectural, engineering and environmental firm H2M Group, a nonconsumer company not often in the headlines, appeared before members of the Hauppauge Industrial Association Thursday morning with a sobering assessment of government cuts expected from the deficit deal in Washington.

The deal is to cut spending by $1 trillion over 10 years and establish a process to identify another $1.5 trillion in cuts to the deficit.

"There are going to be long-term impacts, not just on the federal level, but on the state level," said Molloy, speaking at an HIA-LI executive breakfast at H2M's headquarters.

Molloy said about half of H2M's $40 million in annual revenue was derived from government construction projects. "This is a time when we [the U.S. government] should be investing," he said. "We need to be spending money and getting people back to work."

Losses in revenue from government work "will be made up elsewhere," Molloy said. The company also works on private construction projects, although that sector has been hit hard by the overall economic weakness.

The company has been growing at about 10 percent a year for the past decade, Molloy said, although the recession had an impact. H2M was forced to cut salaries for senior executives during the worst of the downturn. Pay has since been restored.

Molloy said plans are to continue to grow.

He joined the company in the early 1970s and has been chief executive for 16 years. There were about 40 employees back then. There are 260 now. Although companies like H2M are relatively small, Long Island Association economist Pearl Kamer said they are important to Long Island's future as they focus on areas where the region hopes to grow.

Molloy said he is working on a succession plan, but as far as retiring, he said: "It's not going to be this year."