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What is an overcapacity?

What is an overcapacity? Here are some definitions.

Noun
  1. A capacity for the production of a commodity or product that is in excess of what is needed
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Examples
The move has essentially sabotaged Germany's construction industry, which is plagued by massive overcapacity.
Concerned about overcapacity in the auto industry, policy makers in Beijing have been engaged in a lengthy effort to curb auto loans.
Demand has been hurt by the problems at the airlines, the telecom bust, and overcapacity in many industries.
The worldwide overcapacity in steel is larger than the U.S. steel industry.
Now, if they're in an industry suffering from overcapacity and bloated asset prices, they should worry if vultures aren't in sight.
In this steep economic downturn, markets are flushing out overcapacity, winnowing the weak from the strong.

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