overcapacity


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overcapacity

a situation in which a firm or industry has too much production CAPACITY on hand relative to current demand levels. This may be only temporary because of a downturn in the BUSINESS CYCLE. Alternatively, the decline in demand may be permanent (see PRODUCT LIFE CYCLE) or due to the industry having overinvested in new plant relative to long-run demand potential. In this case, overcapacity, leading to greater competition for limited sales is often removed by the disappearance of inefficient firms from the industry, or by RATIONALIZATION schemes involving the MERGER of firms and closure of redundant plant.

overcapacity

see EXCESS CAPACITY.
References in periodicals archive ?
He said the project aims to prevent another overcapacity in a certain grid, like that of Negros Island, to happen again.
Industry data on developed markets non-food retailers show US store-based incumbents are suffering due to disruption by other specialty, off-price retailers such as TJX and Ross Stores, and fast-fashion players, in addition to online rivals and significant physical retail space overcapacity.
"All major economies have a special responsibility to show leadership on this front, demonstrating we respect the rule book as we seek to open markets and embrace opportunities." Roy Rickhuss, of steel union Community, said: "When Theresa May sits down with the Chinese, she needs to hold them to their word on tackling global overcapacity, which has already cost thousands of UK steel jobs."
"Global overcapacity is a major factor behind the steel crisis and has already cost us thousands of jobs.
'There is still overcapacity in the market,' Bautista had said.
A slowing economy and problems with industrial overcapacity have reduced investment opportunities, said Fan Gang, a Chinese central bank vice governor.
The handling of the stock market and currency reform has revealed serious leadership and policy shortcomings, but the management of the real economy over the last several years seems to be proof of nothing less than a system-generated overcapacity crisis.
Nine other provinces have yet to make any dent in their coal production overcapacity.
Premier Li insisted that China was taking strong and determined measures to tackle the problem of overcapacity, adding that China does not use subsidies to give its industries a competitive edge.
RAM Ratings views the implementation of structural reforms to address crucial issues in China, such as industrial overcapacity, highly leveraged and inefficient government-linked entities (GLE), and local government (LG) fiscal imbalances to be challenging.
Meanwhile, unveiling its prioritized tasks for 2016, the central bank has said monetary policy will help slash overcapacity, cut stockpiles, reduce leverage, lower costs of doing business and fix shortcomings, with a focus on reducing steel and coal overcapacity, according to report by state-run Xinhua News Agency on Sunday.
of Irving, Texas, said Tuesday that it will close its T-post fence operations in Magnolia by the end of the third quarter, blaming "global steel overcapacity" and "unfair trade."