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Meaning & use

excess capacity

noun·Advancedbusinessfinance

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UK/ɪkˌses kəˈpæsəti/
US/ɪkˌses kəˈpæsəti/

Meanings

  1. noununcountablebusinessfinance

    The situation in which a company or economy can produce more than people are currently buying.

    Grammar: Used as an uncountable phrase: say 'have excess capacity', not 'have an excess capacity'.

    Patterns

    • have excess capacity
    • excess capacity in something
    • reduce excess capacity
    • excess capacity of something

    The airline is cutting flights because it has too much excess capacity on domestic routes.

    Economists warn that excess capacity in the steel industry is keeping prices low.

    Factories in the region are running with excess capacity after demand fell sharply.

  2. noununcountablebusinessfinance

    The amount by which what can be produced is greater than what is wanted or needed.

    Grammar: Often used after 'of' or 'in' to name the industry or market: 'excess capacity of 20 percent'.

    Patterns

    • excess capacity of + amount
    • excess capacity in something
    • a lot of excess capacity

    The survey found excess capacity of about 15 percent across the hotel sector.

    There is still a lot of excess capacity in the shipping market.

    Managers see the excess capacity as a chance to take on new orders quickly.

Common combinations

have excess capacity
The factory still has excess capacity, so it can take on more work.
reduce excess capacity
The government wants to reduce excess capacity in older industries.
excess capacity in the industry
Excess capacity in the industry has pushed prices down.
a lot of excess capacity
There is a lot of excess capacity in the office rental market.
run with excess capacity
Many plants are running with excess capacity this year.

Synonyms and how they differ

spare capacity
A more neutral everyday phrase for the same idea; it does not sound as negative as 'excess capacity'.
overcapacity
A single word with almost the same business meaning, often used when the problem is serious and long-lasting.
surplus capacity
Similar in meaning but more formal and less common; it stresses the extra amount rather than the problem.

Opposites

full capacityshortage

Word family

capacity noun
The amount that something can hold or produce.
excess noun
An amount that is more than needed or allowed.
overcapacity noun
A situation of having too much production ability; a close one-word equivalent.

Commonly confused: excess capacity or excess baggage? excess capacity or spare capacity?

excess capacity vs excess baggage

This means luggage that is heavier than the allowed limit, or (figuratively) emotional problems from the past; it has nothing to do with production.

excess capacity vs spare capacity

This means ability that is not being used but is not necessarily a problem, while 'excess capacity' usually suggests a business difficulty.

Practice

The carmaker has closed two plants because of ______ in the European market.

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