Various players in the automobile industry have stated that we are facing a historic time in this business with major potential for change on the horizon. Volkswagen has projected that 20 to 25 percent of their new automobile sales in 2025 will be electric. They have also said they are questioning whether to spend more money on the future of diesel cars. Renault believes the diesel automobile investment outlook has dimmed significantly, and some industry consultants are predicting major reductions in the diesel passenger car share of the European market in the coming years. Upstarts like Tesla in the automobile space, Uber, Didi and Lyft in the rideshare space, and new players such as Apple, Alphabet and Google vis-a-vis the connected car and self-driving vehicles will all have significant impact.

Although these changes may seem far away, some thinking needs to be done about what future scenarios could result. You may want to visualize several different futures and their impact on your company. This should help you analyze your strategic options and investment plans over the next five to 10 years. With this sort of change possible, it is no longer good enough to be comfortable with the usual three-year plan. Of course it is also possible that the change will be much slower than some of these projections, and that needs to be a scenario as well.

I will undertake efforts to offset inflation.

It now seems quite likely that inflation is on the rise, and your company should prepare for this. We have been in a low inflation environment for a long time, so you may be out of practice in dealing with higher inflation. Now is a good time to lay out options for 2017 and put actions in place. The Fed has indicated three rate hikes in 2017, although they have been wrong in the past. The policies of the incoming administration in Washington are perceived by economists to be more inflationary. Wages and producer price indices have been showing upward movement of late.

Some potential actions to consider include the following:

Review your 2017 budget plan and test sensitivity to 1 percent higher inflation.

Do a Pareto chart analysis of your fixed costs. Identify three to five areas to focus on for cost savings.

Do a Pareto chart analysis of your variable costs by type and supplier. Identify three to five areas or suppliers to focus on for cost savings. Consider bidding in a few areas, especially if you have not bid them in a while. Consider longer term contracts in exchange for savings.

Consider the impact of higher crude oil pricing. With the recent OPEC agreement, we have seen some price increases. It is unclear to what extent this deal will stick, and also to what extent U.S. production could increase and reduce any impacts on the market. However, the scenario of rising crude prices and associated impacts on raw materials and energy should be taken into account. Consider hedging strategies if these are available to your company.

I will evaluate how information technology can improve my business.

I continue to believe that this is an opportunity area for our industry. However, it is not easy to identify where to apply technology in order to get the best benefits, and once identified, it is also not easy to access the proper technology and apply it to reap the benefits. Consider the prospects for technology in the following areas:

If you are an additive company, have you sufficiently applied information technology to the expensive problem of devising additive formulations to meet industry specifications?

If you are a lubricant marketing company, have you applied technology to link up with your customers in new ways?

If you are an OEM, have you applied technology to better understand the performance of vehicles in the field?

For all companies: Have you applied technology to optimize your supply chain to reduce inventory, improve customer service, optimize use of facilities and reduce outages?

Probably you have taken some of these steps, but I would urge you to think about what you could achieve by extending your application of technology to the next level.

I will prepare for a tighter labor market.

Unemployment in the United States is below 5 percent, which is the lowest level since 2007 and generally considered to be full employment. In addition, the market for engineers and scientists in this country has been tight for some time, especially if you are looking for specialized skills. If we see higher growth over the next few years, as is possible considering the potential changes in corporate taxes and government stimulus, we must consider that the U.S. labor market is going to tighten further. Consider the following for your business:

Are you measuring employee attrition? Has it been going up? Consider how you might understand the reasons behind employee attrition and develop plans to address any significant issues related to the regretted loss of employees.

Consider your pay practices and ensure competitiveness in your local market, perhaps engaging an expert in the field or buying available salary survey information.

Consider enhancing your company relationship with universities and/or trade schools in order to improve your chances of hiring qualified employees.

Ensure your company leadership is doing a good job on important systems such as employee performance feedback and career development.

I hope these suggestions result in a happy and prosperous 2017!

Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. E-mail her at saralefcourt@gmail.com or phone (908) 400-5210.