Plan Z exceeded German wartime industrial capacity

Were the Plan Z ships too large for German yards and industry?

Yes in wartime; peaceful expansion might have created the capacity, but Germany could not realistically scale yards and armour production after war began.

The Plan Z designs were too large for some yards and for Germany's ability to manufacture armour at the required scale. A dictatorship could direct resources and expand facilities during a long peace, though build quality would remain a separate question. War removes the time, labour, and industrial freedom needed for that gradual enlargement. The design problem therefore cannot be separated from the production system expected to deliver the fleet.